Optimum Capital Structure Of Costco Sale

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EXECUTIVE SUMMARY Optimum capital structure (OCS) is best known as an avenue where company finances its assets by chosen the right combination of debt, equity or hybrid securities. OCS is a structure that can be classified as a liabilities to company. For better still, it can be known as the ratio of various type securities of the company for long term financing. Costco Sale is one of the big box retail companies with the capabilities to render value to the customers and employees in North America and the rest of the world. Costco Wholesale has the potential of solid balance sheet, and with the strength of generating cash flow, in order to carry out its operations, i.e. over $900 million was returned to shareholders in the form of…show more content…
It has been a serious process for many organizations to raise capital which automatically has business and financial risks involved. However, two known authors in this field of study believe that companies with low business risk obtains factors of production at a lower cost which may also pave to the ability of the firm to operate more efficiently (Amit & Wernerfet, 1990). Therefore, many stockholders faced a high of uncertainty; this is because some companies do not have the financial strengths to cover its debts that even may result to bankruptcy. Therefore, it is imminent for organization to make a wise decision so as choose the right combination of debt and equity such as short-term and the long-term liabilities. The mixture of debt-equity mix is important so as to maximize the stock price of the Costco. However, it will be significant to consider the Weighted Average Cost of Capital (WACC) as well so that it can evaluate the company targeted capital structure. Cost of capital (OC) may be used by the companies as for long term decision making, so industries that faced to take the important of Cost of capital seriously may not make the right choice by choosing the right project(Gitman’s, ). OPTIMAL CAPITAL STRUCTURE (OCS) Nevertheless, the use of the Optimal Capital Structure (OCS) is the right techniques to be used in order to acquire the right combination of debt and equity that can maximize the

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