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Basic Differences in Capital Structure of Two Firms

CFA® Exam, CFA® Exam Level 1, PRM Exam, PRM Exam I

This lesson is part 2 of 7 in the course Basics of Capital Structure

This video highlights the basic capital structure differences between two firms.

In the example taken, the two shoe firms, namely, Ben’s Shoes and Jason’ Shoes are two exactly same businesses, they operate similarly, and have the same revenue and operating profits. However, they have different capital structure which affects their net profits, and earnings per share.

This video is from Khan Academy.

Previous Lesson

‹ An Introduction to Capital Structure

Next Lesson

Value of a Firm (Using Operating Free Cash Flows) ›

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In this Course

  • An Introduction to Capital Structure
  • Basic Differences in Capital Structure of Two Firms
  • Value of a Firm (Using Operating Free Cash Flows)
  • Does Capital Structure Matter?
  • Agency Costs of Equity and Debt
  • Why Issue of Additional Equity Leads to Share Price Fall?
  • What CFOs Consider While Making Capital Structure Decisions?

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