Why Effective Capital Structure is Require to Maintain in the Business to Make Effective Business Functioning

RUNNING HEAD: Schaffer Corp Ltd
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Name of the student
Topic
University name

Schaffer Corp Ltd
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Executive summary
This report has shown why effective capital structure is required to maintain in the
business to make effective business functioning. There are WACC and capital structure of
company has been discussed.

Schaffer Corp Ltd
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Table of Contents
Executive summary................................................................................2
This report has shown why effective capital structure is required to
maintain in the business to make effective business functioning. There are
WACC and capital structure of company has been discussed.........................2
Introduction............................................................................................5
Answer to question-1.............................................................................5
Short term and long term debts of company.....................................................5
Consistency of debt structure of company.......................................................6
Company and industry operates its debt to influence the proportion of short-term to
long-term debts.................................................................................................7
Computation of cost of debt........................................................................8
Answer to question no-2.........................................................................9
Company’s cost of equity...........................................................................9
Evaluate and discuss your company’s revenue, earnings, EPS, dividends and growth
Expectations.....................................................................................................9
Growth expectation of company.................................................................10
Computation of PE ratio...........................................................................11
Comparable value...................................................................................12
Additional data and information would be preferred to value of the assets.............14

Schaffer Corp Ltd
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Answer to question no-3.......................................................................15
Computation of weighted average cost of capital.............................................15
Explanation of tax rate in relation to WACC..................................................15
Why there is difference in cost of debt and cost of equity..................................15
Should current liabilities be included in cost of capital?....................................16
Major value of the WACC calculation..........................................................16
Scaffer Corp Ltd has used WACC in investment decision.................................17
Capital structure of company with the relevancy of the industry..........................17
Capital structure and what economic circumstances.........................................18
Answer to question-4...........................................................................19
Market analysis......................................................................................19
Current literature search...........................................................................19
Uniqueness of Scaffer Corp Ltd..................................................................19
Conclusion............................................................................................20
References...........................................................................................21