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Capital Structure of Company Accor - Assignment Example
Capital structure refers to the proposition of different sources of long term funds in their capitalization of accompany. It is also concerned with the determination of the composition of different long term sources of funds tat could include debentures.Longterm debts, prefence capital and ordinary share capital.
Accors optimal capital could be achieved when the marginal cost of each source of finance is the same. There is on optimal capital structure for all firms for all times. The financial managers should try to develop an appropriate capital structure. That ha these features.
Simple in the initial stages by limiting the number of issues and types of securities. This will avoid investors becoming hesitant from investing in the company. Preferably Accor should issue equity and preference share in an attempt to develop an optimal capital structure.
Retaining the ultimate control of accompany with the equality shareholder who have the right to elect directors/control in management is important.Accor should issue less equity shares and preference share and debentures in large numbers to the public because these carry limited voting rights whole debentures don't have any.Companys capital structure in such away which would favourably affect the voting structure of existing shareholders and increase their control on the company's affairs.
Liquidity can be achieved for the solvency of corporation Accor should avoid all such debts which threaten the solvency of the company. A proper balance between fixed and current assets is maintained according top the nature and size of business. ...