Question

Equity
Liabilities
Assets
100%
75%
50%
25%
0%
Total Assets
Capital Structure
Table 1: Sample Capital Structure
Assets = Liabilities + Owner's Equity. To be able to acquire assets, our funds must have
come somewhere. If it was bought using cash from our pockets, it is financed by equity.
On the other hand, if we used money from our borrowings, the asset bought is financed by debt.
In the figure above, the total assets is financed by 60% debt and 40% equity.
Accordingly, the capital structure is 60% debt and 40% equity. Try to analyse. Are there ideal
mixture of debt and equity across corporations? Try to express inner understanding as a
manager. Explain your answer.​

Answer 1

Answer:

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