Capital Structure Decision Risk

AFM Financial Management - An Overview Free JAIIB Capsule 27 views Updated 16 Sep 2026

Capsule FREE

AFM · Financial Management - An Overview

Deciding the composition of debt and equity plays a very important role in profitability and sustainability. What is the inherent risk of having a high proportion of debt in a company's capital structure?

Tap to flip and reveal the answer

Premium Content

This answer is available to premium members

27 views WhatsApp

Deciding the composition of debt and equity plays a very important role in profitability and sustainability. What is the inherent risk of having a high proportion of debt in a company's capital structure?

The full answer is part of ClearShorts Premium

This capsule covers Accounting & Financial Management for Bankers, Financial Management - An Overview. Members get the complete explanation plus every other premium capsule, mock test and PDF.

See membership plans

Comments (0)

Login to post a comment.

No comments yet. Start the discussion!

Related JAIIB AFM Capsules

When an organization runs a specific safety drive or a middle-management training course, what type of budget is used?

Programme Budgeting. It is prepared for a specific activity or program, detailing targets, revenues, and expenditures for that event only.

What is the composition and primary role of the Budget Committee in a large firm?

Composed of representatives from various departments, it coordinates, finalizes, and assumes overall responsibility for the master budget.

In the context of implementing budgetary control, what constitutes a 'Budget Centre'?

It is a specific section of the organization with clearly defined functions, for which a separate budget is prepared and controlled.

What is the most widely accepted definition of Accounting given by the American Institute of Certified Public Accountants (AICPA)?

It is the art of recording, classifying and summarising in a significant manner and in terms of money, transactions of a financial character.

What is the purpose of the 'Budget Manual' distributed within a company?

It is a rulebook detailing instructions, guidelines, responsibilities, and timelines for preparing and using budgets across the organization.

How does a financial budget conceptually differ from a simple financial forecast?

A forecast is an assessment of probable future events. A budget is a planned operating and financial goal that implies commitment to achieve it.