Analysing the capital structure of high tech company
Analysing the capital structure of high tech company
As a consultant, provide a formal report analysing the capital structure of high tech company Oracle (mixture of equity and debt). Produce a report examining the capital structure of the firm over the years 2010 to 2015 (6 years inclusive). The report should include detailed calculations of the accounting and financial ratios that you believe are relevant.
In order to successfully complete this essay, you need to make extensive use of the relevant literature, both academic and from the practitioner perspective. It is also important to be able to offer an informative and fact based view on the issues discussed. Avoid unreliable sources and base your answers on academic and policy papers, as well as articles from well respected press (like Financial Times and The Economist). Be concise, succinct but, at the same time, provide well developed arguments.
1. Produce a final report covering the following issues:
– Explain what you understand by the capital structure of a firm and then discuss the Modigliani-Miller theorem of capital structure irrelevance and whether it applies to the real world or not.
– Estimate alternative financial and accounting ratios that explain the capital structure of your chosen firm, based on the audited data from 2010-2015.
– Discuss your findings and what it means for your chosen technology firm with regard to its existing capital structure and its future funding requirements compared to the industry average.
– Without additional calculations, discuss how the capital structure of your chosen firm may change if there was a significant decline in economic activities.
