Capital structure and Centralised: Difference between pages

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Capital structure refers to the sources of capital for a firm as well as the proportion in which they are present.
Treasury organisation which retains control at the centre, contrasted with a decentralised approach.


This term is also used in a simpler way, to refer to the relative proportions of equity and debt within the firm’s long-term capital.
 
As companies became larger, authority in treasury matters tends to become more centralised in the interests of financial efficiency and control.
 
However, greater centralisation, if badly handled, can result in local demotivation and poor alignment of treasury policy with local business needs. In particular, local cash management is sometimes considered to be better managed at subsidiary level.
 
 
In the largest organisations corporates, 'dynamic balance' often applies. This involves the sharing of responsibility between the centre and subsidiaries. Authority moves between centre and subsidiaries on the basis of a continuing dialogue about which party is best suited to make particular decisions.




== See also ==
== See also ==
* [[Capital]]
*[[Decentralised]]
* [[Corporate finance]]
*[[In-house bank]]
* [[Equity]]
*[[Profit centre]]
* [[Modigliani and Miller]]
* [[Optimal capital structure]]
* [[Shareholder value]]
 
[[Category:Corporate_finance]]

Revision as of 09:49, 21 March 2016

Treasury organisation which retains control at the centre, contrasted with a decentralised approach.


As companies became larger, authority in treasury matters tends to become more centralised in the interests of financial efficiency and control.

However, greater centralisation, if badly handled, can result in local demotivation and poor alignment of treasury policy with local business needs. In particular, local cash management is sometimes considered to be better managed at subsidiary level.


In the largest organisations corporates, 'dynamic balance' often applies. This involves the sharing of responsibility between the centre and subsidiaries. Authority moves between centre and subsidiaries on the basis of a continuing dialogue about which party is best suited to make particular decisions.


See also