What is the connection between the capital structure and the debt structure?

The connection between the capital structure and the debt structure is relatively simple; It is simply part of the first. The capital structure is a combination of capital and debt money used to finance large parts of the company's operation. The debt structure is therefore loans and bonds that make up the debt part of this mixture. The capital structure and debt structure are carefully monitored because few companies want a strong debt load on their balance sheets. Too many debts are indicated by the overestimated company, while the company is responsible for repayment of the debt regardless of its current income flow.

Many different calculations go to review and create the company's capital structure. Among the most common pieces that may include a company here are common and preferred stocks and short -term and long -term banks and bonds. In some cases, one individual project may have both property and debt money that helps to finance individual activities within the Projektu. Other times, only one item from the capital structure is necessary. Analysts of corporate finance, accounting and business analysts are all individuals who can review the structure of capital and debt structure of the company.

Bank loans are often the most common forms of debt in the structure of the company's debt. Small and large organizations can use these loans to finance operations because they are often easily accessible. Large organizations also have the opportunity to offer bonds that are investments sold to the buyer in the open market. Bonds can be dangerous because they represent legal obligations that must be paid regardless of the ability of society. Even business liquidation can rarely stop the entitlement to bonds that investors have on the assets of the company, making them very risky integration into the capital structure and debt structure.

Realtration of debtFor capital, both internal and external participating tools are used to review the capital structure and debt structure. The basic role model for this financial ratio is divided by the overall owner of the shareholder, while the less difference is the use of long -term debt instead of total obligations. The result with a high ratio is indicated by an aggressive society that funds debt operations, with the hope of widespread growth in the figure. However, the earnings that the company must generate ensure that there is also a relatively high profitability. Interest payments from debt can quickly disrupt any benefits caused by debt financing in the structure of capital and debt structure.