structure

Examples of structure in the following topics:

• Overview of Organizational Structure

  • Business organizations can be structured in various ways, depending on their standing as legal entities, internal structure, and management processes .
  • Also called a "product structure," the divisional structure groups each organizational function into a division.
  • This structure can combine the best of both separate structures.
  • All of these structures are for profit, but there are also non-profit corporations and other structures.
  • Some common structures are the functional, divisional, matrix, team, network, and modular structures.

• Pros and Cons of a Partnership

  • Business organizations can be structured in various ways, in terms of their structures as legal entities and also in terms of the internal structure and management processes.
  • The partnership is one type of business structure.
  • The partnership is the next simplest business structure after the sole proprietorship.
  • A large advantage of the partnership structure is its ease in filing and tax treatment.
  • This means that the partnership structure is only as good as the partnership at the relational level.

• Optimal Capital Structure Considerations

  • The optimal capital structure is the mix of debt and equity that maximizes a firm's return on capital, thereby maximizing its value.
  • Capital structure is the way a corporation finances its assets, through a combination of debt, equity, and hybrid securities.
  • In short, capital structure can be termed a summary of a firm's liabilities by categorization of asset sources.
  • Captial structure is the assignment of the sources of company assets into equity or debt securities.
  • Explain the influence of a company's cost of capital on its capital structure and therefore its value

• Pros and Cons of Sole Proprietorship

  • The sole proprietorship structure has the benefit of simplicity and control but the drawback of unlimited liability.
  • Business organizations can be structured in two major ways, namely, in terms of their structures as legal entities and also in terms of the internal structure and management processes.
  • The sole proprietorship is one type of business structure from a legal status perspective.
  • It is a structure open to businesses run and owned by one entrepreneur.
  • A large advantage of the sole proprietorship structure is its ease of filing incorporation and tax documents as well as having uninterrupted control of the business.

• Tax Considerations

  • This leads to a conclusion that capital structure should not affect value.
  • The optimal structure then, would be to have virtually no equity at all.
  • However, we see that in real world markets capital structure does affect firm value.
  • There is much debate over how changing corporate tax rates would affect debt usage in capital structure.
  • A company's decision makers must take taxes into consideration when determining a firm's capital structure.

• Constraint on Managers

  • Managers will have their actions influenced by their firm's capital structure and the resources that it allows them to use.
  • Managers who make decisions about the firm's corporate behavior will have their actions influenced by capital structure and the resources that it allows them to use.
  • Adopting the right kind of capital structure can help combat this kind of problem, however.
  • When the capital structure draws heavily on debt, then this leaves less money to be distributed to managers in the form of compensation, as well as free cash to be used on behalf of the business.
  • Therefore, firms that have debt-heavy capital structures have managers with goals that tend to be more aligned with those of the shareholder.

• Capital Structure Overview and Theory

  • A firm's capital structure is the composition or 'structure' of its liabilities.
  • In reality, capital structure may be highly complex and include dozens of sources.
  • Modigliani and Miller created a theory of Capital Structure in a perfect market.
  • The value of a company is independent of its capital structure
  • The optimal structure, then would be to have virtually no equity at all.

• Pros and Cons of a Corporation

  • Business organizations can be structured in various ways, in terms of their structures as legal entities and also in terms of the internal structure and management processes.
  • The corporation is one type of business structure.
  • The structure also generally requires the maintenance of at least annual reporting.
  • One of the most favorable advantages of the corporate structure is the protection of personal assets.
  • One of the world's largest companies by revenue, it is structured as a corporation.

• The Term Structure

  • Term structure of interest rates describes how rates change over time.
  • Term structure is a phrase used to describe how a given quantity or variable changes with time.
  • Term structure of interest rates is often referred to as the yield curve.
  • There are three main economic theories attempting to explain different term structures of interest rates.
  • Differentiate between the different theories explaining the different term structures of interest rates

• Cost of Capital Considerations

  • Cost of capital is important in deciding how a company will structure its capital so to receive the highest possible return on investment.
  • One of the major considerations that overseers of firms must take into account when planning out capital structure is the cost of capital.
  • By utilizing too much debt in its capital structure, this increased default risk can also drive up the costs for other sources (such as retained earnings and preferred stock).
  • Management must identify the "optimal mix" of financing–the capital structure where the cost of capital is minimized so that the firm's value can be maximized.
  • Describe the influence of a company's cost of capital on its capital structure and investment decisions