This project report provides a comprehensive analysis of Altium Limited's capital structure. It begins with an executive summary and an introduction to capital structure theory, emphasizing its impact on a company's cost, risk, and profitability. The report then offers an overview of Altium Limited, an Australian company in the EDA industry. A key component is the calculation of the Weighted Average Cost of Capital (WACC), detailing the cost of equity using the CAPM model and the cost of debt. The report also calculates the gearing ratio to assess the company's long-term liabilities relative to its total capital. Findings reveal that Altium Limited's capital structure is not optimal, with a high proportion of equity and low debt, leading to a higher cost of equity and overall WACC. The report recommends increasing the level of debt to achieve a more balanced and optimal capital structure. A reflection section highlights the complexities of capital structure analysis and the insights gained from the study.
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