Optimal Capital Structures

Optimal Capital Structures

Submitted by astellr on April 19, 2008

Category: Business

Words: 3647 | Pages: 15

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The purpose of this assignment is to explore the theories relating to "Optimal Capital Structure". These theories will be covered in detail limited to the extent of the availability of word content allowed for in this assignment. This will then lead to a practical analysis of the capital structures of two well known Australian companies being:

• Wesfarmers Pty Ltd (asx code: WES)

• Publishing and Broadcasting Limited (asx code: PBL)

Specifically, I will compare and contrast differences and similarities that may be applicable and provide possible explanations utilising appropriate theoretical models as to why these companies have different capital structures

Firstly, let's explore what is meant by "Optimal Capital Structure". Why would this be important?

Many companies exist to purely maximise the wealth of shareholders. However the reality is that companies are faced with numerous forces which both dictate and or influence key decisions and or resulting structural