Capital structure - introduction

In this lesson

1. 0:00 Welcome to capital structure
2. 0:19 Capital structure: debt and equity decisions
3. 0:52 Syllabus content overview and WACC
4. 1:27 Miller and Modigliani theories explained
5. 1:50 Real-world capital structure practices
6. 2:14 Learning outcomes and key skills
7. 3:24 Study hints and formula practice

About this lesson

This introductory video covers the foundations of capital structure—essentially the mix of debt and equity a company uses to fund itself—and previews the key topics you'll study: calculating weighted average cost of capital (WACC), Miller and Modigliani theories, how capital structure changes affect financial ratios, and the role of taxation. You'll discover that while the formulas look intimidating, they're repetitive and manageable with practice, and that this topic connects strongly to ratios and cost of capital concepts you may have already covered. By the end of this section, you'll understand different capital structure theories, apply formulas to analyse optimal funding structures, evaluate how changes to capital structure impact key ratios like earnings per share and gearing, and consider taxation implications including thin capitalisation rules. Whether you're preparing for AFM, APM, or related exams, mastering capital structure gives you practical insight into how real companies make financing decisions—from data-driven calculations to market-based judgment calls.

Duration: 5m