Basic tools of capital-structure management include
A) EBIT-EPS analysis.
B) comparative leverage ratios.
C) capital budgeting techniques.
D) both A and B.

Question

Quizplus · Accepted Answer

EBIT-EPS analysis and comparative leverage ratios are both tools used in capital-structure management. EBIT-EPS analysis helps in determining the optimal capital structure by analyzing the impact of different debt and equity levels on earnings per share. Comparative leverage ratios, on the other hand, help in comparing an organization's debt level with that of its peers or industry standards. Hence, both these tools are important in managing the capital structure of an organization.

Basic Tools of Capital-Structure Management Include