For board members and senior executives, financing and capital structure decisions are not mere technical matters—they are strategic levers that shape shareholder value, enterprise resilience, and market competitiveness. The course “Debt and Equity Financing & Cost of Capital and Capital Structure”, offered by the Oxford Training Centre, is designed for directors who must balance leverage, capital allocation, dividend policies, and equity strategies in a rapidly shifting global financial environment.
This program emphasizes boardroom-level implications rather than formulaic analysis. Directors will explore how debt and equity financing, weighted average cost of capital (WACC), gearing ratios, dividend policies, and stock buybacks affect enterprise value. Participants will be equipped to challenge management assumptions, oversee capital allocation frameworks, and safeguard the company’s long-term competitiveness in capital markets.
Boards today face mounting scrutiny from investors, regulators, credit rating agencies, and activist shareholders. Financing choices—whether through debt or equity—send strong signals to the market about a company’s confidence, growth prospects, and financial discipline. A poorly timed decision on capital structure, dividend policy, or share buybacks can undermine credit ratings, restrict liquidity, and erode enterprise value. Conversely, a thoughtful financing strategy, rooted in cost-of-capital considerations and risk oversight, strengthens corporate resilience and drives sustainable growth.
Directors are not expected to calculate WACC models or run discounted cash flow (DCF) valuations themselves. However, they must understand their implications in boardroom debates: how debt and equity financing alter risk-return profiles, why WACC defines the minimum return hurdle for strategic investments, how dividend policy and stock buybacks influence investor perception, which capital allocation choices enhance enterprise value in the long term, and how KRIs, risk prioritization, and resource allocation frameworks ensure strategic discipline. This course situates capital structure and financing decisions within the broader responsibilities of governance, oversight, and market-facing leadership.
Objectives
By the end of this course, directors will be able to
- Interpret the strategic implications of debt vs. equity financing for corporate competitiveness
- Assess capital structure trade-offs using WACC, gearing ratio, and interest rate risk analysis
- Evaluate major projects using IRR, payback period, DCF, and enterprise value considerations
- Oversee dividend policies through residual dividend theory, dividend signaling, and clientele effects
- Critically assess the strategic use of stock buybacks and their long-term impact
- Apply KRIs, cost-benefit analysis, and resource allocation frameworks to financing oversight
- Strengthen boardroom dialogue on liquidity, risk metrics, and capital adequacy
Target Audience
This program is tailored for:
Corporate Governance Professionals who align shareholder communication with financing and dividend strategies
Board Members and Non-Executive Directors overseeing financing and dividend policies
CEOs and CFOs seeking alignment between capital market expectations and board strategy
Private Equity and Institutional Investors serving on boards with a focus on financing structures
Risk and Audit Committee Members overseeing financial stability, capital adequacy, and liquidity management
Course Modules
Module 1: Debt and Equity Financing – Strategic Trade-offs
Boards must weigh the benefits of debt against the dilution risks of equity. Debt financing includes bonds, syndicated loans, convertible instruments, and covenant-driven obligations. Debt offers tax shields but increases leverage and refinancing risk. Equity financing includes IPOs, private placements, and follow-on offerings. Equity raises long-term capital but dilutes control and EPS. Directors must ensure financing decisions align with credit ratings, liquidity needs, and shareholder confidence. Case Example: A board debates whether to issue long-term bonds in a volatile rate environment or pursue equity issuance to fund acquisitions.
Module 2: Cost of Capital – WACC as a Strategic Hurdle
The Weighted Average Cost of Capital (WACC) defines the hurdle rate for investment. Cost of debt is net of tax shields, shaped by market interest rates and company creditworthiness. Cost of equity is derived from market expectations, risk premiums, and beta volatility. Directors must confirm that management’s WACC assumptions reflect capital market conditions and investor sentiment. Practical Exercise: Directors review a capital project with IRR slightly above WACC and debate whether assumptions about cash flow growth and risk exposure are credible.
Module 3: Capital Structure and Gearing Ratios
Optimizing capital structure is about balance, not extremes. The gearing ratio signals leverage health to investors, lenders, and credit agencies. Boards must consider how rising rates impact debt service and liquidity buffers. Preserving financial flexibility ensures resilience during downturns, acquisitions, or share buybacks. Boardroom Scenario: Directors assess whether refinancing short-term debt into long-term maturities strengthens flexibility without raising WACC disproportionately.
Module 4: Dividend Policy and Market Signaling
Dividend policy is more than a payout ratio—it is a signal to the market. Residual Dividend Theory suggests dividends are paid after funding all positive NPV projects. Dividend signaling indicates stability suggests confidence, while cuts often trigger sharp market sell-offs. The clientele effect attracts investor groups aligned with the company’s dividend strategy. Case Study: A board faces pressure to maintain dividends despite weak cash flow. The debate centers on balancing investor expectations with long-term sustainability.
Module 5: Stock Buybacks – Value Creation or Financial Engineering?
Stock repurchases can signal strength but also risk value destruction. Strategic benefits include EPS enhancement, offsetting dilution, and adjusting capital structure. Risks include debt-funded buybacks during market highs that erode long-term shareholder value. Directors must question whether buybacks are opportunistic or aligned with enterprise strategy. Director’s Role: Ensuring buybacks complement—not substitute—growth investment and balance sheet strength.
Module 6: Risk Oversight – KRIs and Capital Allocation
Effective boards integrate risk oversight into financing discussions. KRIs include interest coverage, liquidity ratios, and capital adequacy metrics. Boards must rank exposures by potential enterprise value impact. Cost-benefit analysis should look beyond short-term EPS to long-term value and risk-adjusted returns. Boards should challenge whether capital is directed to debt repayment, R&D, or shareholder distributions. Boardroom Dialogue: Should excess cash be used to reduce leverage, fund innovation, or increase dividends?
Module 7: Enterprise Value and Shareholder Confidence
Ultimately, board-level financing decisions shape enterprise value—a composite of market capitalization, debt obligations, and investor trust. Enterprise value metrics guide acquisition decisions, valuation multiples, and shareholder negotiations. Transparent communication of capital strategy enhances credibility. Directors must ensure financing choices sustain not just quarterly performance, but long-term strategic positioning.