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Final Application Project

Recommendation cooper tire rubber company holds a

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Unformatted text preview: much of the assets are funded by debt. Cooper Tires has done a good job decreasing this ratio over the past 3 years, from 13.9% in 2010 to 12% in 2012. It is beneficial for the company to continue to reduce this ratio and continue to find other ways to fund their assets. Capital Structure A company’s capital structure refers to the way a company finances its assets through some combination of debt and equity. If we take a look at Cooper Tire’s Capital structure in the chart below, we can see in 2012 that the company’s assets are financed 16% through long term debt and 84% through common equity and retained earnings. As you can see the company has been shifting its sources of funding from long term debt to common equity and retained earnings over the past 3 years. I would consider Cooper tires to have a pretty strong capital structure considering that have a long debt dependency and rely more on common equity and retained earnings. Sensitivity According to my calculations, if sales were to drop by 10%,...
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