Capital structure

Reuters  Jun 23  Comment 
* says its capital structure will have no impact on PartnerRe's ratings in the event it buys company
The Hindu Business Line  Jun 21  Comment 
The Chennai-based wood panel manufacturer Uniply Industries Ltd is streamlining its capital structure and consolidating its retail presence. Keshav Kantamneni, who acquired the company a...
Automotive World  Oct 29  Comment 
The Board of Directors of Fiat Chrysler Automobiles N.V. (NYSE: FCAU) (“FCA”) today announced that in connection with its discussions regarding capital planning to support the Group’s 2014-2018 Business Plan, the Board confirmed FCA’s...


A company's capital structure refers to the relative proportions of equity (raising money by selling shares) and debt (raising money by borrowing) which the company uses to finance its activities.

A company's capital structure can have an enormous impact on its earnings per share, taxes, and interest payments, even though it is relatively easy for companies to change capital structures - I.E., to pay off debt by selling new shares, or to borrow money and buy back shares. As a result, valuation metrics which are not "capital structure neutral" -- ie, which are impacted by capital structure -- make it difficult to compare one company to another.

Earnings, for example, are not capital structure neutral because of the impact of taxes and interest. As a result, investors use metrics such as EBIT and EBITDA instead - profitability metrics which exclude the components of a company's earnings impacted by its capital structure - to compare companies and understand the fundamental earnings potential of the business.

Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki