Capital Structure

Capital Structure - market standards of 2: 1. Therefore, it...

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Capital structure (% assets by debt and equity) Approximate weighted average cost of equity by market cap. Total Assets  18,502,339 Total Debt - 16,478,875 Total Equity -   2,023,464 Market Cap  - 3.61 Billion Based on the above information, the following analysis has been done: The percentage of assets by debt = ($ 18,502,339 / $ 16,478,875) x 100   = 112% Approx. The percentage of assets by equity = ($18,502,339 / $ 2,023,464) x 100       = 914% Approx. Looking at the above, it can be said that the firm is a highly levered firm as most of funding is  being done through debt. The debt equity ratio of the firm is almost 8 : 1 that is way above the 
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Unformatted text preview: market standards of 2: 1. Therefore, it can be said that the firm is highly risky at the operating and the financial levels as debt must be eating up most of the interest in the form of interest expense. The weighted average equity by market capitalization = ($ 2,023,464 / $ 3.61 Billion) x 100 = 0.050%. The company is trading at very high multiples. The book value of equity is less than 0.050% of the market capitalization of the company....
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