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ACC508 Information Systems, Decision Support Systems

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Added on  2021-06-17

ACC508 Information Systems, Decision Support Systems

   Added on 2021-06-17

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Report on ARB Corporation Limited Capital Structure
ACC508 Information Systems, Decision Support Systems_1
EXECUTIVE SUMMARYA capital structure refers to a company’s sources of finance. Financing can range fromequity to debt, however, in most cases it will usually be a combination of both. Thesources of debt include trade credit, short term debt loans and long term debt. Thesources of equity include retained profits and issuance of shares. Analyzing the capital structure of a company can provide a lot of valuable information toinvestors and creditors regarding its value creation. For example, a company with aheavy reliance to debt would be considered more aggressive and hence more risky thana company that is financed via equity. That being said, this company may experience ahigher growth rate. The goal of many companies is to maximize their shareholder value. One of the ways tomaximize shareholder value is to minimize its cost of debt and equity. The optimalcapital structure of a firm is the mix of equity and debt that minimizes a firm’s cost ofcapital.
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TABLE OF CONTENTSEXECUTIVE SUMMARY.................................................................................................................................iiTABLE OF CONTENTS..................................................................................................................................iiiCHAPTER 1 : INTRODUCTION.......................................................................................................................1CHAPTER 2 : ANALYSIS OF CAPITAL STRUCTURE.........................................................................................2CHAPTER 3 : CONCLUSION- SHAREHOLDER VALUE.....................................................................................7REFERENCES................................................................................................................................................8APPENDIX....................................................................................................................................................9
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CHAPTER 1 : INTRODUCTIONThe purpose of this report is to provide information on the capital structure of ARBCorporation Limited (ARB.AX) which is listed in the ASX and advice whether the firmhas been successful in maximizing wealth generation for its shareholders. The financial statements of ARB were used to investigate its current capital structure,optimal capital structure and key financial ratios. Based on this information, the reportthen concludes on ARB’s value creation,1
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