Skip to content
KnowledgeCity

Basics of Corporate Capital Structure

Evaluate funding strategies with confidence through core theories and financial performance metrics.
Preview the first lesson free. Get full access to all 8 lessons.
Request a demo
Course: On-Demand
Provider :  KnowledgeCity  8 Lessons ·  25m  in English 

Course Description

In this Basics of Corporate Capital Structure course, you’ll understand how companies make financing decisions using key capital structure theories. We’ll also examine how the cost of capital affects financial performance and how risk separates across business and financing choices. These insights support smarter funding strategies and long-term value creation. To help you apply this knowledge in context, we’ll use real-world scenarios and metrics throughout the course.

We’ll explore capital structure fundamentals, presenting frameworks such as the Modigliani–Miller, trade-off, and signaling models. You’ll build the ability to assess debt-equity decisions and connect cost metrics to performance outcomes. We’ll also address WACC, ROIC, and EVA to give you a complete understanding of funding strategy and financial risk. By the end of this course, you’ll be able to evaluate capital structure decisions based on cost, risk, and financial impact.

Learning Objectives:

• Explain core capital structure theories and their practical implications

• Calculate the cost of debt, equity, and the weighted average cost

• Interpret performance metrics like ROIC, ROE, and EVA

• Differentiate between business risk and financial risk in funding

• Evaluate financing decisions using risk, cost, and return analysis

What You'll Learn

  • Explain core capital structure theories — including the Modigliani–Miller, trade-off, and signaling models — and their practical implications
  • Calculate the cost of debt, the cost of equity, and the weighted average cost of capital (WACC)
  • Interpret performance metrics such as ROIC, ROE, and EVA
  • Differentiate between business risk and financial risk in funding decisions
  • Evaluate financing decisions using risk, cost, and return analysis
  • Assess debt-equity decisions and connect cost metrics to performance outcomes

Key Takeaways

  • Companies make financing decisions using key capital structure theories such as the Modigliani–Miller, trade-off, and signaling models.
  • The cost of capital affects financial performance, and metrics like WACC, ROIC, and EVA connect funding strategy to performance outcomes.
  • Risk separates across business and financing choices, so business risk and financial risk must be distinguished when evaluating funding decisions.
  • Capital structure decisions can be evaluated based on cost, risk, and financial impact to support smarter funding strategies and long-term value creation.

Frequently Asked Questions

What does the Basics of Corporate Capital Structure course cover?

The course covers capital structure fundamentals and theories (Modigliani–Miller, trade-off, and signaling models), the cost of debt, equity, and the weighted average cost of capital, performance metrics like ROIC, ROE, and EVA, the separation of business and financial risk, and strategic trade-offs in debt decisions.

What skills will I gain from this course?

You will build skills in capital allocation, financial analysis, and risk management — including the ability to assess debt-equity decisions, calculate cost of capital, interpret performance metrics, and evaluate financing decisions using risk, cost, and return analysis.

How is the course structured?

The course includes lessons on Capital Structure Theories, Cost of Capital and Performance Metrics, Business and Financial Risk Separation, and Strategic Trade-Offs in Debt Decisions, with 'Test Your Knowledge' checks after the main lessons.

Does the course use practical examples?

Yes. Real-world scenarios and metrics are used throughout the course to help you apply the concepts in context.