Capital Structure

A company's capital structure is the balance of different methods of financing that provides funding for the company's operations. The basic breakdown is between debt and equity, but preferred shares may also factor into the capital structure. Debt includes all forms of liabilities, including both long-term debt and current liabilities. Equity includes both the book value of shares issued and the company's retained earnings. The market value of the shares is not relevant in calculating the firm's capital structure. Analyzing the capital structure of the company is done by first calculating the capital structure. Because debt and equity have different risk characteristics, the ideal capital structure of the company must be evaluated against the type of business model that it has. Different risk profiles (capital structure) are considered ideal for different types of companies. This report will analyze the capital structures of three companies -- Goodyear (NYSE: GT),...
[ View Full Essay]