This statemen is FALSE [The proportion of owned funds and borrowed funds may differ from organization to organization depending upon certain factors viz. internal and external factor]
Reasons:
- The pattern of capital structure of various firms varies widely. Hence to determine the best possible pattern of capital structure i.e. proportion of owned funds and borrowed funds, many factors are to be considered viz. internal and external factors.
- Many internal factors influence capital structure viz. requirement of capital, size and nature of business, growth of business, cash position, period of finance, trading on equity, development of the firm etc.
- On the other hand, external factors such as market conditions, cost of capital, attitude of investors and financial institutions, government policies and regulations etc. influence capital structure.
- Also, it is important to maintain a proper mix of various types of finance in capital structure, so that the interest of equity shareholders is protected.
Thus, the above statement is false.
