Introduction

Capital Structure:
A mix of a company's long-term debt, specific short-term debt, common
equity and preferred equity. The capital structure is how a firm finances
its overall operations and growth by using different sources of funds.
Debt comes in the form of bond issues or long-term notes payable, while
equity is classified as common stoc, preferred stoc or retained
earnings. !hort-term debt such as woring capital requirements is also
considered to be part of the capital structure.
Cost Of Debt:
The effective rate that a company pays on its current debt. This can be
measured in either before- or after-tax returns" however, because interest
expense is deductible, the after-tax cost is seen most often. This is one
part of the company's capital structure, which also includes the cost of
equity.
To get the after-tax rate, you simply multiply the before-tax rate by one
minus the marginal tax rate #before-tax rate x #$-marginal tax%%. &f a
company's only debt were a single bond in which it paid '(, the before-
tax cost of debt would simply be '(. &f, however, the company's
marginal tax rate were )*(, the company's after-tax cost of debt would
be only +( #'( x #$-)*%
Cost Of Equity:
&n financial theory, the return that stocholders require for a company.
The traditional formula for cost of equity #,-.% is the dividend
capitali/ation model0
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A firm's cost of equity represents the compensation that the maret
demands in exchange for owning the asset and bearing the ris of
ownership.
Dividend:
$. A distribution of a portion of a company's earnings, decided by the
board of directors, to a class of its shareholders. The dividend is most
often quoted in terms of the dollar amount each share receives
#dividends per share%. &t can also be quoted in terms of a percent of
the current maret price, referred to as dividend yield. Also referred
to as 1Dividend 2er !hare #D2!%.1
3. 4andatory distributions of income and reali/ed capital gains made
to mutual fund investors.

Debt Financing :
5hen afirm raises money for woring capital or capital expenditures
by selling bonds, bills, or notes to individual and6or institutional
investors. &n return for lending the money, the individuals or
institutions become creditors and receive a promise that the principal
and interest on the debt will be repaid.

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OBJECTIVES:
To evaluate the design optimal capital structure.
To now how the designing of capital structure is done by the
manager and what is the effective mix of it.
To study the financial leverage of the company.
To understand how different capital structures affect the
performance of the company.
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Scope of study:
The study is about the total equity and debts of the company and how
the design by the manager at the flotation time. This study is confined
to the 78AD9A 2A,:&AD! ;TD.and the reference period of the
study covers the year 3**<-*=. The study is related to the capital
structure and various ris lie financial of the company.
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Limitation
4ost of information is collected by the secondary
The data taen for interpretation is for a limited period.
Due to time constraint in depth analysis cannot be made.
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ET!ODOLO"#:
The present study based on the data collected from primary as well as
secondary sources to accomplish the purpose and various ob>ective of
the descriptive study.
PRIMARY DATA: 2rimary data has been collected from the
following source.7y direct interview from the employee
SECODARY DATA: !econdary data collected from the following
sources"
The company records6reports
Through internet.
Tec$nica% too%s:
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&esea'c$ et$odo%ogy
Tit%e: CA !tudy of Designing of ,apital !tructure of 7AD8A9A
2A,:A&D!D
Statement of p'ob%em
To choice of an approximate of capital structure depends on number
of factor such as nature of a company, regulatory of the earnings,
condition of the money maret, attitude of investor.
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