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Capital Structure

Understand and analyze a company's capital structure in detail.

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19 Lessons (50m)

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  • Description & Objectives

  • 1. Financing vs. Operating Items

    01:25
  • 2. Equity vs. Debt, and Leverage

    04:41
  • 3. Equity Items on the Balance Sheet

    04:19
  • 4. Which Share Count to use for Market Capitalization

    02:15
  • 5. Calculating Share Count Workout

    02:16
  • 6. Accounting for Share Transactions Workout

    04:47
  • 7. Free Float Shares

    00:55
  • 8. Forecasting Retained Earnings

    02:22
  • 9. Forecasting Retained Earnings Workout

    02:54
  • 10. Debt Products

    03:27
  • 11. Net Debt

    02:06
  • 12. Net Debt Workout

    02:53
  • 13. Interest, Debt Repayment and BS Presentation

    04:40
  • 14. PIK Interest and BS Presentation

    03:01
  • 15. PIK Interest Workout

    01:36
  • 16. Leverage Ratios

    02:34
  • 17. Leverage Ratios Workout

    03:51
  • 18. Case Study Capital Structure | Interactive Video

    00:00
  • 19. Capital Structure Tryout


Prev: Non-Current Assets Next: Cash Flow Statement

Financing vs. Operating Items

  • Notes
  • Questions
  • Transcript
  • 01:25

Understand that operating items produce products and services and they are financed by financing items

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Financing vs Operating Items Practise EmptyFinancing vs Operating Items Practise Full

Glossary

Financing Operating Sources and Uses
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Transcript

When thinking about a balance sheet, it's important to distinguish between financing items and operating items Put another way, operating items are going to produce products and then sell them And then the financing items, finance the operating items So I have a source of funding, and how do I use it? I buy operating items So we now need to look at the balance sheet, try and distinguish between them So I start with some financing assets. On the screen I've got cash (a financial asset) I've now got some operating assets and some operating liabilities as well. Let's go through them quickly Accounts receivable, inventory (we definitely couldn't run the business without those kind of items), property plant and equipment (shorthanded to PP&E). Again, they're the kind of things that produce our products On the liabilities side, accounts payable A core part of operating, if we weren't offered a credit period by our suppliers, it might put us out business A core part of operating Finally, we then move on to the financing items. And they're split here between debt (the two items in the top of the orange section) and equity (the orange item at the bottom of the right hand side there) Those items are going to help fund the operational items

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CPE stands for Continuing Professional Education, by completing learning activities you earn CPE credits to retain your professional credentials. CPE is required for Certified Public Accountants (CPAs). Financial Edge Training is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors.

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