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Are the share holders of a company likely to gain with a debt component in the capital employed? Explain with example

Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 aliya bhat asked over 2 years ago

Hi I am Adhya. I want to know, Are the share holders of a company likely to gain with a debt component in the capital employed? Explain with example

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Avatar 37a3bd7bc7328f0ead2c0f6f635dddf60615e676e6b4ddf964144012e529de45 Chirag answered over 2 years ago

**Are the share holders of a company likely to gain with a debt component in the capital employed?** There is a simple concept rthat goes by the name of "Optimal Capital Structure". The debt component in capital employed or in other words Leverage provieds an interset tax shield so a company gets benefitted because of that but there is an optimal mix exceeding which the heavy interests may dominate the benefits.

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