M&M Pizza Essay examples

Finding the perfect capital structure in terms of risk and reward can ensure a company meets shareholder expectations and protects a firm in times of recession. Capital structure refers to how a business puts its money to “work”. The two forms of capital structure are equity capital and debt capital. Both have their benefits and limitations. Striking that perfect balance between the two can mean the difference between thriving versus trying to survive.

they must pay interest payments or risk bankrupting of the firm. It also helps reduce

Interpretation: 53% of the total assets are financed through debts; the remaining 39% is financed through equity.

As shown in the financial income statement (Exhibit3), Intel Corp. (INTC) has a capital structure consisting most of equity. Intel has very little debt in its capital structure and the cost of debt would have only a marginal effect on the overall cost of capital. The current capital structure of Intel is not optimal yet since optimal capital structure is making minimum weighted-average cost of capital.

debt of 8%, and cost of equity of 15%. Treasury bills are yielding 3% rate of return.

Shareholder’s equity would be lower than that shown in 1982 ($318,000) because the company has to pay off interest and principal for many loans. There will be little money left for shareholder’s equity.

3. What is the financial risk of the company (the LT debt to total capitalization ratio)?

• Cost of capital must reflect current capital market conditions (current required returns) • Cost of capital must also reflect the optimal relative proportions of debt and equity the firm will

By the 1950s, America’s full-fledged love affair with pizza traversed into the business arena and major players in commercialized pizzerias appeared on the scene. By the 1950s and 1960s, pizza parlors, bowling alleys, and drive-in movie theaters offered relatively inexpensive entertainment and became popular hangouts for courting teenagers. Naturally, pizza proved lucrative to local businesses and was added to menus at local teenage hangouts. As America’s youth were dating and falling in love, they further solidified their love affair with pizza and fast food. Pizza had become so popular by the mid-1960s that a major pizza chain opened and began offering home delivery while another major player began selling pizza franchises across America.

7. Debt to capitalization = Long-term Debt in Balance Sheet / Long term debt + Net Assets in

Taking the CAPM equation, we were able to figure out eh cost of equity and in its credit range

When analyzing Microsoft’s capital structure the percentage of liabilities that construct the firm’s total assets is 42.87%. Showing that less than half of the firm’s total assets are represented by liabilities. Now the percentage of the total assets that are represented by stockholders’ equity is 57.12%. Showing that stockholder’s equity represents slightly more than half of

Back when I was only five years old, pizza was always one of my favorite food in my life.

Capital structure is defined as the mix of the long-term sources of funds that a firm use. It is composed of equity, debt securities and affect long-term financing of the entity. It is made up by shareholder’s funds, long-term debt and preference share capital. The capital structure mostly focus on the proportions of debt and equity displayed in the company financial statements, especially in the balance sheet (Myers, 2001). The value of a firm can be calculated by the sum of the value of its firm’s debt and equity.

Already in 1958, Modigliani and Miller have pointed the discussion of capital structure towards the cost of debt and equity. According to their first proposition, in a world of no corporate taxes and with perfect markets, financial leverage has no effect on a firm’s value. In their second proposition, they state that the cost of equity equals a linear function defined by the required return on assets and the cost of debt (Modigliani and Miller, 1958).