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Level 5 Diploma in Accounting and Business

Capital Structure Theories and External Influences

AB502 · Financial Management — Week 9 of 16

CourseAB502
Week9 of 16
SemesterI
TutorOnline in the course chat

This week’s topics

Capital Structure Theories and External Influences

  1. Modigliani and Miller propositions
  2. Trade-off theory and pecking order theory
  3. Lender covenants and credit ratings
  4. Taxation impact and bankruptcy costs
  5. Capital structure (theories) - CIMA F3 lecture
  6. Lecture 54: Capital Structure - Part I
  7. Lecture 55: Capital Structure - Part II

What you will be able to do

  • 3.1 Explain the factors that determine the capital structure of a business.

Activity

Start with this week’s 3 videos, then: Seminar, guided reading and a short written task: explain the factors that determine the capital structure of a business.

Study materials

Videos

  • Capital structure (theories) - CIMA F3 lecture · YouTube · OpenTuition · 32 min · for registered students
  • Capital Structure Theory Explained - Raghavendra Rau · YouTube · Gresham College · 64 min · for registered students
  • Capital Structure and Financial Ratios – Other financial ratios - ACCA Financial Management (FM) · YouTube · OpenTuition · 28 min · for registered students

Further resources

  • Principles of Finance 2e, ch. 17: How Firms Raise Capital · PDF · OpenStax, textbook chapter; pp. 509–536 · for registered students
  • MIT 15.414 Financial Management, lecture notes: Financing Decisions (2) · PDF · Other, slides · for registered students
  • How Do CFOs Make Capital Budgeting and Capital Structure Decisions? · PDF · Reading, article · for registered students
Materials marked “for registered students” open in the student portal, which is set up as soon as you receive final acceptance.
MidtermWeek 10
Course chat

Admitted students ask questions on this week’s page in the student portal: an AI assistant trained on the course answers first, and during the course’s timetabled classes Connect to your tutor brings your tutor into the chat, who may start a call if needed.

Open this week in the portal
Course plan
  • Week 1: Scope and Objectives of Financial Management
  • Week 2: Operational Functions of Financial Management
  • Week 3: Nature and Elements of Working Capital
  • Week 4: Working Capital Assessment and Funding Strategies
  • Week 5: Managing Working Capital: Cash and Liquidity
  • Week 6: Managing Working Capital: Receivables, Inventory, and Payab…
  • Week 7: Determinants of Capital Structure
  • Midterm: Midterm evaluation
  • Week 9: Capital Structure Theories and External Influences
  • Week 10: Causes of Undercapitalisation and Overcapitalisation
  • Week 11: Strategic Impact of Capital Imbalances
  • Week 12: Applying Financial Management in practice: case studies
  • Week 13: Assignment workshop: research, planning and referencing
  • Week 14: Assignment workshop: drafting, feedback and improvement
  • Week 15: Review and coursework completion
  • Final: Final assessment and submission
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