CApital Structure is mixure of equity and debt. It simply reprasent the praportion of Equity and debt

Let us see how management decisions on capital structure, capital budgeting problems, and working capital affect achieving the goal of financial management.

Fiance managment is majorly concerened with the following three issue

(1) Investing decesion

(2) Financing decesion

(3)Devidend decesion

Main objective of the finance managment is to wealth maximazation of the share holderes

CApital strucure decesion can effact to the wealth of the company because of the foolowing reason

Debt is cheaper but it more risky for the business to payment the interest and payment of principal

As aginst to these equity is less risky because there is no compulson for the payment of devidend

Capital structure decesion affect both the profitabelity and the financial risk

CApital budjeting decesion can also affect the firm because in capital budjeting invoves comitment of the fund for the long term .They affect the earning capacity, Profitabelity ,Competetive ness and requirement of working capital

If the managment have taken proper decesion of the capital strucure and capital budjeting then the nedd of the working capital for day to day requirement for running the firm is ducessfully fullfilled. because the firm is able to generate cash lequidity after payment of all is obligation