Capital Structure - Shama-e Zaheer Trade-off Model: Balance the costs (including agency costs) and benefits of debt

and issue optimal level of debt, based on lo est !"##$ %ec&ing 'rder Theory: (se internal financing and first$ hen e)hausted, issue safer securities

In Bangladesh *reater +ree #ash +lo (+#+) result in lo er debt ,igher ta)es result in higher debt -arger firms have more debt ,igher #ollateral .alue of "ssets (#.") imply higher debt Te)tile, %harma have more debt/ #ement, Tannery have less debt *uidelines: 0$ Match maturities of debt and assets 1$ %rioriti2e fle)ibility of repayment 3$ 4epay e)pensive debt first 5$ #reate collateral from business operations