Part 3

After completing the Balance Sheet in the Excel Spreadsheet hyperlinked above, you should be able to measure a companys capital structure. Based on your assessment of the firm's Balance Sheet, you are to report to senior management on these key components:

What is the nature of this company's capital structure? Include percentages in your commentary?

The nature of said company's capital structure is highly aggressive because Companies that use more debt than equity to finance assets have a high leverage ratio and an aggressive capital structure.

The said company finance its assets from long term debt of 80,000 which is more than equity amounting 27,000.

Company's Capital structure financed by long term debt by 74.76% and by equity by 25.24%

Compare this capitalization structure percent to an Industry Standard of 50%. What is the result?

The capital structure of said company is 107,000 and financial structure is 187,000.

The capitalization structure percentage of company 57.21% which is more than industry standard of 50% which means that it finances 7.21% more from long- term source than industry standard.

To what extent is this company 'leveraged'?

The debt equity ratio of company:

D/E Ratio= Debt/ Equity= 80,000/27,000= 2.96 or 296% which is very high.

Financial leverage= Total Assets/ Total Equity= 187,000/27,000= 6.92

Part 3 (a) - use Debt/Assets to get Capitalization Structure.

I can't get the balance sheet to attach.

Assets
Property/eq	120,000
Cash and Equip	2000
inventory	25000
Accounts rec	40,000
Total Assets	187,000

Liabilities
Long term Note	80,000
Current Lia	80,000
Total Liabilities	160,000
Shareholders Equity	27,000
Total Liabilities and shareholder Equity	187,000