View Course Overview for Available CPE and Access Options

Introduction to Financial Statement Ratio Analysis

Next Lesson:
Ratio Summary
Lesson Questions and Answers2 Questions
There are no questions.         Answers to Frequently Asked Questions (FAQs)
Member's Profile
Ashraf Al-Haj
(CFO at Al Jeel Medical company / El Ajou Group ) | Nov 12, 2015

hi
i would like to know how to reach to the best capital structure for a company .?
currently am studying the current capital struct of my company which it has D/E 4 to 1 and the debit ratio is 83%.

what do you think ?

Member's Profile
Joseph Ori
View Instructor Profile | Feb 17, 2016

Without knowing anything about your company and industry, this appears to be very high leverage for a business. The appropriate capital structure should be one that generates the lowest weighted average cost of capital (see my other presentation on corporate capital structure) but does not place the firm in a high debt position that may create bankruptcy risk.
I would try to maintain a capital structure of 60% debt and 40% equity for a private company. However, this would depend on the type of business, industry and cost and availability of equity capital.

Instructor for this course
  Course Overview CPE
Course Syllabus
INTRODUCTION and OVERVIEW
  6:20PREVIEW: Introduction to Financial Statement Ratio Analysis
  Ratio Summary20:33
  Financial Statement-Income Statement10:45
  Comments on Solvency, Profitability and Market Value Ratios10:46
  Ford Motor Company Ratio Analysis3:18
  Limitations and Problems with Ratio Analysis and Qualitative Factors5:46
Continuous Play
  Financial Statement Ratio Analysis57:28
Supporting Materials
  Slides: Financial Statement Ratio AnalysisPDF
  Financial Statement Ratio Analysis Glossary/ IndexPDF
Review & Test
  REVIEW QUESTIONSquiz
 FINAL EXAMexam