“Share Capital is better than debt capital”. In the favour of this statement explain one factor which affects the capital structure.
The ‘cash flow position’ is one of the important factors which affects the capital structure decision. As per this factor, while making a choice of the capital structure the future cash flow position should be kept in mind. Debt capital should be used only if the cash flow position is really good because a lot of cash is needed in order to make payment of interest and refund of capital. Hence, on this basis it can be said that share capial is better than debt capital.