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Capital structure theory, issues and debates while showing how capital structre choices affects a firms return on investment (RO - Research Paper Example

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Business and Financial Risk Name of the of the University Date Abstract The project includes capital structure analysis of a public company. The company that has been chosen to perform the analysis is Coca Cola. In the first portion of the project, an introduction has been given about the company Coca Cola along with the present capital structure issues related to the company…

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Capital structure theory, issues and debates while showing how capital structre choices affects a firms return on investment (RO

In this portion, the MM approach for the capital structure theory has been described, and the assumptions have been stated and criticized. The main objective of this project is to show the importance of the capital structure of a company and its affect on the performance. A detailed analysis of the debt and equity financing has been done in this project from 2010 to 2012. Their implications have been discussed. In this project, it has also been shown how the capital structure of a company determines the business risk. Table of Contents Table of Contents 3 Introduction 4 Business and Financial Risks 5 Business Risks 5 Financial Risks 5 Modigilani and Miller’s Capital Structure Theory 6 Capital Structure Evidence and Implications 7 Optimal Capital Structure for the Company 9 Conclusion 11 References 12 Appendices 13 Introduction Coca Cola is a multinational beverage manufacturer, marketer and retailer of non-alcoholic beverages (Coca Cola, 2013a). It has its headquarters in Atlanta, Georgia. It was established in 1886 by John Pemberton who was a pharmacist in Columbus, Georgia (Coca Cola, 2013b). Initially the beverage was sold for 5 cents each glass at Jacob’s Pharmacy and regularly nine glasses were purchased. ...
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