This 6 page paper is a proposal for an project to determine the optimum capital structure for an emerging form with special consideration of cash flow. The paper considers the existing research and then outlines a new research proposal to identify patterns of structure and cash flow. The bibliography cites 5 sources.
Name of Research Paper File: TS14_TEcplcash.rtf
Unformatted Sample Text from the Research Paper:
sources with borrowing and investment making up the structure, As the company grows there may be increasing need for capital to support the work in progress. Indeed, it has been
noted in many studies that the downfall of many emerging companies has been over success where the increasing needs for capital have resulted in a weakening of the position and
facing either a sale or a failure (Eidleman, 1995). There have been many studies looking at the way capital structure may or may not impact on the performance of a
firm, however, few have focused on emerging firms, where the capital requirements may be more volatile. The purpose of this paper is to determine what and how optimal capital structure
may be determined for an emerging company, especially concerning the issue of cash flow. The issue of capital structure and the impact
o the firm was first tackled by Modigliani and Miller (1958) in a paper that has become a seminal work and requires consideration in any study of capital structure. The
paper by Modigliani and Miller in 1958 was an interesting model as it stated that the value of a company has no relationship to the way in which the capital
is structured. This model had two propositions, the first was that the market value of a company will not be dependant on
the way it is financed, but the way that it operates. To place this into an easier context it means that the company will be valued as a result of
its cash flows and the size of the cash flows and how they impact on the overall value of the company, not on their origin (Modigliani and Miller, 1958). Therefore