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                                                                                      4.2






                                CAPITAL STRUCTURE THEORIES / H¡${nQ>b ñQ´>³Ma ϶moarO

                   Q.33. Write a short note on a capital structure theories and give names of different capital
                         structure theories.
                         EH$ H¡${nQ>b ñQ´>³Ma ϶moarO na em°Q>© ZmoQ> {b{IE Am¡a {d{^ÝZ H¡${nQ>b ñQ´>³Ma ϶moarO Ho$ Zm‘ Xr{OE&

                  Capital Structure Theories                  H¡${nQ>b ñQ´>ŠMa ϶moarO
                       Capital structure can affect the value of a  H¡${nQ>b ñQ´>ŠMa {H$gr H$ånZr H$s A{Zª½g AWdm
                  company  by  affecting  either  its  expected  H¡${nQ>b H$s H$m°ñQ> `m XmoZm| H$mo à^m{dV H$aVo hþE CgH$s
                  earnings or the cost of capital or both. Every  d¡ë`y H$mo à^m{dV H$a gH$Vm h¡Ÿ& àË`oH$ ’$m¶Z|{e¶b
                  financial manager tries to have an optimum  ‘¡ZoOa `h à`mg H$aVm h¡ {H$ CgH$s H$ånZr H$m H¡${nQ>b
                  capital structure but the existence of optimum
                                                              ñQ´>ŠMa AmXe© hmo {H$ÝVw AmXe© H¡${nQ>b ñQ´>ŠMa Ho$ g§~§Y
                  capital structure is not accepted by all. In order
                  to  explain  the  relationship  between  capital  _| g^r EH$_V Zht h¡Ÿ& H¡${nQ>b ñQ´>ŠMa Ed§ \$_© H$s d¡ë`y
                  structure and the value of the firm, different  Ho$ ~rM g§~§Y H$mo Xem©Zo Ho$ {b`o AbJ-AbJ {gÕm§V
                  theories have been suggested like:          à{Vnm{XV {H$`o JE h¢, O¡go:
                   1. Net Income Approach (NI),                1. ZoQ> BÝH$‘ H$s AdYmaUm,
                   2. Net Operating Income Approach (NOI),     2. ZoQ> Am°naoqQ>J BÝH$‘ H$s AdYmaUm,
                   3. Traditional Approach and                 3. Q´>o{S>eZb AdYmaUm Ed§
                   4. Modigliani-Miller (MM) Approach.         4. _mo[X½bmZr-{_ba H$s AdYmaUmŸ&      


                   Q.34. Explain the assumptions and implications of the NI (Net Income) approach. Illustrate
                         your answer with examples.
                         NI (ZoQ> B§H$‘) {d{Y H$s EOåneÝg VWm BpåßbHo$eÝg H$mo g‘PmB¶o VWm AmnHo$ CÎma H$m CXmhaU g{hV
                         dU©Z H$s{OE&
                                                           OR
                         Write a short note on Net Income approach. / ZoQ> B§H$‘ {d{Y na g§{jßV {Q>ßnUr {b{IE&

                  Net Income (NI) Approach                    ZoQ> BÝH$‘ (NI) EàmoM
                      Net  income  approach  was  suggested  by   ZoQ> BÝH$‘ H$s AdYmaUm S>çyaÝS> Zo à{Vnm{XV H$s
                  Durand. According to this approach, the capital  WrŸ& Bg ϶moar Ho$ AZwgma, H¡${nQ>b ñQ´>ŠMa g§~§Yr {ZU©`
                  structure decision is relevant to the valuation of
                                                              go \$_© H$m _yë`m§H$Z à^m{dV hmoVm h¡Ÿ& AÝ` eãXm| _|, `{X
                  the firm. In other words, a change in financial
                  leverage will change the overall cost of capital as  ’$m¶Z|{e¶b brdaoO _| n[adV©Z {H$`m OmE Vmo H¡${nQ>b H$s
                  well as the total value of the firm. If the ratio of  Q>moQ>b H$m°ñQ> Ed§ \$_© H$s Hw$b d¡ë`y à^m{dV hmoVr h¡Ÿ& `{X
                  debt to equity is increased, the weighted average  B{ŠdQ>r H$s VwbZm _| F$U H$m AZwnmV ~‹T>m`m OmVm h¡ Vmo
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