Analyzing the Impact of Alterations in Capital Structure on Firm Value: A Study with Emphasis on Selected Information Technology Companies

Abstract

Finance plays an indispensable role at every juncture of an enterprise’s journey, from its inception to its culmination. Scarce financial resources hinder business operations, while mismanagement thereof spells impending failure. To instate an optimal financial framework conducive to seamless operations, meticulous evaluation of both current and future capital requirements is imperative. Crafting a capital structure of utmost efficiency is paramount, for it directly influences the cost of capital and the ramifications of equity trading or leverage on the company’s valuation. Consequently, the most advantageous capital structure entails a harmonious amalgamation of debt and equity, aimed at maximizing the company’s value and enriching its stakeholders, all while minimizing the cost of capital.