Capital Structure Theories (NI, NOI, Traditional, MM)
Capital Structure Theories explained for CA Inter May 2026 — NI, NOI, Traditional & MM Approach with Indian examples, tax shield formula, an
Paper 6 — Financial Management & Strategic Management · Chapter
Capital Structure Decisions
Capital structure theories (NI, NOI, Traditional, MM), optimum capital structure, leverages and EBIT-EPS analysis. Expect 8–10 marks per attempt.
33 microlessons in this chapter
Read each in 5 minutes. Each has worked examples + the bare-Act text for reference.
All lessons
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2
Optimum Capital Structure
Optimum capital structure for CA Inter FM: minimise WACC, maximise firm value. Covers NI, NOI, Traditional & MM approaches with solved examp
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3
Operating, Financial & Combined Leverage
Operating, Financial & Combined Leverage explained for CA Inter FM — formulas, solved examples with ₹ figures, and exam pitfalls to avoid.
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4
EBIT-EPS Analysis & Indifference Point
EBIT-EPS Analysis for CA Inter FM: learn the indifference point formula, when debt beats equity, and how to solve exam problems step-by-step
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5
Agency Problem and Agency Cost
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6
Arbitrage Process
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7
Capital Structure vs Financial Structure
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8
Control as a Factor in Capital Structure
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9
EBIT-EPS Indifference Point
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10
EBIT-EPS Indifference Point & Financial Break-even
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11
EBIT-EPS-MPS Relationship
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12
Factors Affecting Capital Structure
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13
Introduction to Capital Structure Decisions
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14
Major Considerations in Capital Structure Planning (Risk, Cost, Control)
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15
Modigliani-Miller (MM) Approach - With Tax
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16
Modigliani-Miller (MM) Approach - Without Tax
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17
Modigliani-Miller (MM) Approach With Tax
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18
Modigliani-Miller (MM) Approach Without Tax
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19
Modigliani-Miller (MM) Approach — With Tax (1963)
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20
Modigliani-Miller (MM) Approach — Without Tax (1958)
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21
Net Income (NI) vs Net Operating Income (NOI) Approach
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22
Net Operating Income (NOI) Approach
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23
Over-Capitalization
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24
Over-Capitalization vis-à-vis Under-Capitalization
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25
Over-Capitalization vs Under-Capitalization
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26
Over-capitalisation
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27
Pecking Order Theory
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28
Principles Governing Capital Structure
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29
Relationship between EBIT, EPS and MPS
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30
Trade-off Theory
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31
Trading on Equity
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32
Traditional Approach to Capital Structure
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33
Under-Capitalization
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