An Overview of The Theories of Capital Structure

The methods of the financing are more effective for Continuing operations and performance of profitable project in the process of the company development and it causes survival of the companies in competitive markets. Financing is done by different methods of short-term and long-term. Companies can provide their financial resources from inside (for example of retained earning) or from outside (through issuance of the stock or debts). The main objective of companies is to increase value of the company and to maximize shareholders wealth. Therefore, they make use techniques that help them to achieve to this important. This paper takes a look at existing theories in about capital structure. The theories of capital structure divide into two general parts traditional and modern theories. In general, the focus all of these theories is on the impact of the type of financial resources on company value.