Capital Structure Analysis
Each student will analyze a publicly held company’s capital structure by applying the theories and principles presented throughout the course.
The capital structure analysis should include the following sections:
- A review of the company’s capital structure and major issues.
- A review of business and financial risks related to the company’s capital structure.
- Criticisms of the company’s capital structure supported by information from the textbook or appropriate academic resources.
- An estimation of the company’s optimal capital structure through the use of ratio analysis which will include a discussion of liquidity, asset management, debt management, profitability and market value ratios, and a DuPont analysis. Refer to Table 3.1 for a list of the ratios that should be included in the ratio analysis section of the paper. Do not simply calculate and list the ratios. This section should include a discussion of the “meaning behind the numbers”.
- An interpretation of the financial ratios through cross-sectional analysis benchmarking either with another company in the industry or industry standards (Refer to chapter 3 of the text)
- A summary of your capital structure analysis that addresses the company’s business risk, need for financial flexibility, growth opportunities and threats based upon it capital structure.
The analysis should be between 8-9 pages of text, which does not include the title page, table of contents, reference page, etc. The paper will adhere to APA formatting guidelines. You are required to include 4 reference sources in addition to the text. The references must be academic, scholarly reviewed journal articles. Do not use Wikipedia, dictionaries, encyclopedia or other such sources for your references.
The paper will be graded based upon the quality, depth and completeness of the capital structure analysis.
