HINDUSTHAN COLLEGE OF ENGINEERING AND TECHNOLOGY

Approved by AICTE, New Delhi and Accredited with ‘A’ Grade by

NAAC
(An Autonomous Institution, Affiliated to Anna University, Chennai)
Othakalmandabam Post, Coimbatore

DEPARTMENT OF MANAGEMENT SCIENCES

MASTER OF BUSINESS ADMINISTRATION

COURCE CODE & NAME:16BA2202 / FINANCIAL MANAGEMENT

TOPIC: CAPITAL STRUCTURE EVALUATION OF AN ORGANIZATION

SUBMITTED BY

NAME : CHARAN PRANAV.T

REG NO : 1926015
BATCH : 2019-2021
DATE : 29/06/2020

EVALUATION CRIETRA MARKS

CONTENT (3)
PRESENTATION )2(
TOTAL (5)

Faculty Name: Mrs.V.Kanimozhi Faculty Sign:

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 BRITANNIA

INTRODUCTION ABOUT COMPANY :

Britannia Industries is one of India’s leading food companies with a 100

year legacy and annual revenues in excess of Rs. 9000 Cr. Britannia is among the most
trusted food brands, and manufactures India’s favorite brands like Good Day, Tiger,
NutriChoice, Milk Bikis and Marie Gold which are household names in India. Britannia’s
product portfolio includes Biscuits, Bread, Cakes, Rusk, and Dairy products including
Cheese, Beverages, Milk and Yoghurt. Britannia is a brand which many generations of
Indians have grown up with and our brands are cherished and loved in India and the world
over. Britannia products are available across the country in close to 5 million retail outlets
and reach over 50% of Indian homes.
The company’s Dairy business contributes close to 5 per cent of revenue and Britannia dairy
products directly reach 100,000 outlets.
Britannia Bread is the largest brand in the organized bread market with an annual turnover of
over 1 lac tons in volume and Rs.450 crores in value. The business operates with 13 factories
and 4 franchisees selling close to 1 mn loaves daily across more than 100 cities and towns of
India.
We have a presence in more than 60 countries across the globe. Our international footprint
includes presence in Middle East through local manufacturing in UAE and Oman, are the No
2 biscuit player in UAE with a strong contention to leadership and have a similarly strong
market position in the other GCC countries. We are also the market leaders in Nepal and are
in the process of investing a manufacturing facility in the country.
Our foot print spreads across North America, Europe, Africa and South East Asia through
exports and we are investing in a state- of- the- art facility in Mundra SEZ, Gujarat, to service
the exports markets.
Our strategic expansion plan is based on the principle of ‘One new market a year’. We plan to
expand through local operations in Africa and South East Asia in the coming years.
Britannia takes pride in having stayed true to its credo, ‘Eat Healthy, Think Better’. Having
removed over 8500 tonnes of Trans Fats from products, Britannia became India’s first Zero
Trans Fat Company. Over 50% of the Company’s portfolio is enriched with essential micro-
nutrients which nourish the body.

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The company set up the Britannia Nutrition Foundation in 2009, and began working on
public private partnership to address malnutrition amongst under-privileged children and
women.
HISTORY :
Britannia Industries Limited (BIL) is one of India's leading food companies.
Britannia's product portfolio includes Biscuits Bread Cakes Rusk and Dairy products
including Cheese Beverages Milk and Yoghurt. Its brand portfolio includes Tiger Marie Gold
Good Day 50:50 Treat NutriChoice and Milk Bikis. BIL has a presence in more than 60
countries across the globe. BIL's international footprint includes presence in Middle East
through local manufacturing in UAE and Oman. The company is also the market leader in
Nepal. The Company was born in 21st March of the year 1918 as a public limited company.
The Company's plants are situated in Kolkata Delhi Chennai Mumbai and Uttarakhand. In
1921 it became the first company east of the Suez Canal to use imported gas ovens.
Britannia's business was flourishing. But more importantly Britannia was acquiring a
reputation for quality and value. As a result during the tragic World War II the Government
reposed its trust in Britannia by contracting it to supply large quantities of 'service biscuits' to
the armed forces. A new factory was established in the year 1924 at Kasara Pier Road in
Mumbai. In the same year the Company became a subsidiary of Peek Frean& Company
Limited U.K. a leading biscuit manufacturing company and further strengthened its position
by expanding the factories at Calcutta and Mumbai. In 1952 the Kolkata factory was shifted
from Dum Dum to spacious grounds at Taratola Road in the suburbs of Kolkata. During the
same year automatic plants were installed in Calcutta and later in 1954 the automatic plants
were installed in Mumbai plant also in the same year the development of high quality sliced
and wrapped bread in India was initiated by the company and was first manufactured at Delhi
and a new bread bakery was set up at Delhi in the year 1965. Britannia Biscuit Company
takes over biscuit distribution from Parry's during the year 1975. In 1976 the company had
introduced Britannia bread in Calcutta and Chennai. During the year 1978 the company made
Public issue in that Indian shareholding crossed 60%. The Company re-christened from
Britannia Biscuit Company Limited to Britannia Industries Limited with effect from 3rd
October of the year 1979. The Company had signed a 10-year technical collaboration
agreement with Nebico Pvt Ltd. Nepal during the year 1980 for the supply of know-how
relating to manufacturing packaging and marketing of biscuits and selection of plant and
machinery. During the year 1989 BIL's Executive Office was relocated to Bangalore. During

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the year 1990 two new brands of biscuits Elaichi Creamand and Petit Beurre were launched.
Also in the same year a new cashew badam variant of the brand Milk Bikis and brand
extension of pure magic biscuit Vanilla cream were launched Fruit bread was launched in
Delhi. The Company launched two new speciality brands in the year 1991 viz. Britannia milk
bread and Britannia brown bread in Delhi and extended nationally its main brands Petit
Beurre and Elaichi Cream. In 17th August of the year 1991 the Company handed over its
Soya unit at Vidisha MP to SM Dychem Ltd. BIL had celebrated its Platinum Jubilee in the
year 1992. After a year in 1993 Wadia Group had acquired the stake in ABIL UK and
becomes an equal partner with Group Danone in BIL. The Company was in re birth phase
during the year 1997 new corporate identity 'Eat Healthy Think Better' leads to new mission
of 'Make every third Indian a Britannia consumer' and in the same year BIL entered into the
dairy products market. In 1998 BIL had launched Half/Half a soft cake filled with cream in
two variants chocolate-vanilla and vanilla-orange. The Company had rolled out its flavored
milk brand `Zip-Sip' in tetrapaks in the year 1999. Zip-Sip had been launched in Mumbai and
some markets in the South.Forbes Global Ranking rated the company during the year 2000
among Top 300 small companies. In the same year the company had launched Britannia
Milkman Butter a product under the Milkman brand. BIL made its fund in-principle
agreement to acquire 49 per cent of Kwality Biscuits in the year 2001 through internal
accruals. During the year 2002 the company had entered into a joint venture with the Fonterra
Cooperative Group New Zealand's biggest company and one of the leading diary co-
operative groups in the world and the Britannia New Zealand Foods Pvt. Ltd was born. Pure
Magic the company's product was winner of the WorldstarAsiastar and Indiastar award for
packaging in the same year 2002. After a year in 2003 BIL had launched 'Treat Duet' most
successful of the year and Britannia Khao World Cup Jao rocks the consumer lives yet again.
During the year 2004 Britannia accorded the status of being a 'Superbrand' and the brand
Good Day added a new variant Choconut in its range. Reviewed marketing alliance with the
Kolkata-based Thacker Dairy Products Pvt Ltd. In the year 2005 Britannia New Zealand had
launched health drink for adult. The new plant in Uttaranchal commissioned during the year
2005 it was ahead of schedule. In the same year BIL launched yet another exciting snacking
option the Britannia 50-50 Pepper Chakkar. BIL had forged a strategic alliance with CCD
Daily Bread Pvt Ltd in the year 2006 a Bangalore based Company engaged in manufacturing
and retailing of premium breads cakes snacks and high end ready to eat foods. In the year
2007 Britannia industries formed a joint venture with the Khimji Ramdas Group and acquired
a 70 percent beneficial stake in the Dubai-based Strategic Foods International Co. LLC and

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65.4% in the Oman-based Al Sallan Food Industries Co. SAOG. The company was rated as
the No 1 Most Trusted Food Brand in a survey conducted by AC Nielsen ORGO-MARG and
published in Economic Times in the year 2007. Britannia launched Iron fortified 'Tiger
Banana' biscuits 'Good Day Classic Cookies' Low Fat Dahi and renovated 'MarieGold' during
the period of 2008. BIL was ranked 27th place in the list of India's Fastest Growing Large
Companies by Business Today Special on June of the year 2008. In 2009 Britannia took full
control of Daily Bread. During the year Britannia New Zealand Food (BNZF) became a BIL
subsidiary after BIL bought out New Zealand's Fonterra from the existing joint venture.
BNZF was renamed Britannia Dairy Pvt. Ltd. (BDPL). During the year Britannia became the
first bakery brand in India to remove trans-fats from 99.9% of its products. During the year
Wadia Group became the largest shareholder in BIL after acquiring stake holdings from
Group Danone.In November 2011 Britannia Bread launched its new range of Health Breads
in Delhi. The range consists of Honey & Oats Bread Multi-Grain Bread 100% Whole Wheat
Bread and Multi-Fiber Bread.In 2013 Britannia launched new NutriChoice Crackers Range a
biscuit made with the natural taste of sun-kissed golden wheat.In 2014 Britannia entered into
an exclusive tie-up with Amazon for the launch of its latest product Good Day Chunkies a
super-premium chocolate chip cookie. In 2015 Britannia Bourbon India's first premium
chocolate biscuit completed 60 glorious years.In 2016 Britannia launched Cake Biscotti
India's first ever classic 'Bridge' product combining the best of the world of a cake and that of
a cookie. During the year Britannia launched its state of the art R&D Centre facility in Bidadi
Karnataka.The Board of Directors of Britannia Industries at its meeting held on 9 February
2016 considered and approved a Scheme of Arrangement under Sections 391-394 of the
Companies Act 1956 for demerger of the Manufacturing Business division and Retail Sales
Business division of Daily Bread Gourmet Foods (India) Private Limited a wholly-owned
subsidiary of Britannia Industries into Britannia Industries. On 28 March 2017 BIL
announced that it has signed a joint venture agreement with Chipita S.A. a Greek company
for the manufacture and sale of ready-to-eat delicious croissants in India through a joint
venture company namely Britchip Foods Limited. BIL will hold 60% stake and Chipita will
hold 40% stake in Britchip Foods Limited.

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COMPANY PROFILE :

Britannia Industries Limited is a food company, which is engaged in the manufacture of

biscuits, cakes and rusks. The Company operates through the Foods segment, which
comprises bakery and dairy products. The Company's product brands under biscuits category
include Good Day, Crackers, NutriChoice, Marie Gold, Tiger, Milk Bikis, Jim Jam + Treat,
Bourbon, Little Hearts, Pure Magic and Nice Time. Its products under breads include Whole
Wheat Breads, White Sandwich Breads and Bread Assortment. Its products under diary
category include Cheese, Fresh Dairy and Accompaniments. Its products under cakes
category include Bar Cakes, Veg Cakes, Chunk Cake, Nut & Raisin Romance, and Mufills.
Its product under rusk category includes Premium Bake. The products of the Company are
exported across the world, which include Gulf Cooperation Council Countries (GCC),
African Countries and American Countries. Its subsidiaries include Manna Foods Private
Limited and International Bakery Products Limited.

CAPITAL STRUCTURE :

The capital structure is the particular combination of debt and equity used by a company to
finance its overall operations and growth. Debt comes in the form of bond issues or loans,
while equity may come in the form of common stock, preferred stock, or retained earnings.

What Is Capital Structure?

The capital structure is the particular combination of debt and equity used by a company
to finance its overall operations and growth. Debt comes in the form of bond issues or loans,
while equity may come in the form of common stock, preferred stock, or retained
earnings. Short-term debt such as working capital requirements is also considered to be part
of the capital structure.

KEY TAKEAWAYS

1. Capital structure is how a company funds its overall operations and growth.
2. Debt consists of borrowed money that is due back to the lender, commonly with interest
expense.
3. Equity consists of ownership rights in the company, without the need to pay back any
investment.
4. The Debt-to-Equity (D/E) ratio is useful in determining the riskiness of a company's
borrowing practices

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Understanding Capital Structure

Both debt and equity can be found on the balance sheet. Company assets, also listed on the
balance sheet, are purchased with this debt and equity. Capital structure can be a mixture of a
company's long-term debt, short-term debt, common stock, and preferred stock. A company's
proportion of short-term debt versus long-term debt is considered when analyzing its
capital structure.When analysts refer to capital structure, they are most likely referring to a
firm's debt-to-equity (D/E) ratio, which provides insight into how risky a company's
borrowing practices are. Usually, a company that is heavily financed by debt has a more
aggressive capital structure and therefore poses greater risk to investors. This risk, however,
may be the primary source of the firm's growth.
Debt is one of the two main ways a company can raise money in the capital markets.
Companies benefit from debt because of its tax advantages; interest payments made as a
result of borrowing funds may be tax deductible. Debt also allows a company or business to
retain ownership, unlike equity. Additionally, in times of low interest rates, debt is abundant
and easy to access.
Equity allows outside investors to take partial ownership in the company. Equity is more
expensive than debt, especially when interest rates are low. However, unlike debt, equity
does not need to be paid back. This is a benefit to the company in the case of
declining earnings. On the other hand, equity represents a claim by the owner on the future
earnings of the company.

Measures of Capital Structure

Companies that use more debt than equity to finance their assets and fund operating activities
have a high leverage ratio and an aggressive capital structure. A company that pays for assets
with more equity than debt has a low leverage ratio and a conservative capital structure. That
said, a high leverage ratio and an aggressive capital structure can also lead to higher growth
rates, whereas a conservative capital structure can lead to lower growth rates.
Analysts use the debt-to-equity (D/E) ratio to compare capital structure. It is calculated by
dividing total liabilities by total equity. Savvy companies have learned to incorporate both
debt and equity into their corporate strategies. At times, however, companies may rely too
heavily on external funding, and debt in particular. Investors can monitor a firm's capital
structure by tracking the D/E ratio and comparing it against the company's industry peers.

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BALANCE SHEET :

A balance sheet is a financial statement that reports a company's assets, liabilities and
shareholders' equity at a specific point in time, and provides a basis for computing rates of
return and evaluating its capital structure

Britannia Industries
Consolidated Balance Sheet ------------------- in Rs. Cr. -------------------
Mar '20 Mar '19 Mar '18

12 mths 12 mths 12 mths

Sources Of Funds
Total Share Capital 24.05 24.03 24.01
Equity Share Capital 24.05 24.03 24.01
Reserves 4,378.78 4,229.22 3,382.22
Networth 4,402.83 4,253.25 3,406.23
Secured Loans 1,514.05 61.92 84.57
Unsecured Loans 0.00 76.10 93.65
Total Debt 1,514.05 138.02 178.22
Minority Interest 35.65 32.68 13.14
Total Liabilities 5,952.53 4,423.95 3,597.59
Mar '20 Mar '19 Mar '18

12 mths 12 mths 12 mths

Application Of Funds
Gross Block 1,917.73 2,174.59 1,670.08
Less: Accum. Depreciation 0.00 486.29 324.48
Net Block 1,917.73 1,688.30 1,345.60
Capital Work in Progress 0.00 101.24 202.82
Investments 2,893.23 1,476.28 1,079.28
Inventories 740.96 781.38 652.79
Sundry Debtors 320.36 394.24 304.60
Cash and Bank Balance 122.85 109.82 186.42
Total Current Assets 1,184.17 1,285.44 1,143.81
Loans and Advances 1,847.10 1,690.56 1,416.41
Total CA, Loans & Advances 3,031.27 2,976.00 2,560.22
Current Liabilities 1,685.28 1,609.91 1,402.49
Provisions 204.42 207.96 187.84
Total CL & Provisions 1,889.70 1,817.87 1,590.33
Net Current Assets 1,141.57 1,158.13 969.89
Total Assets 5,952.53 4,423.95 3,597.59

Contingent Liabilities 0.00 287.84 242.47

Book Value (Rs) 183.07 176.98 283.71

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 EQUITY ANALYSIS FOR LAST 3 YEARS OF RIL INDUSTRIES :

YEAR Equity share Networth(in crcs)

capital (incrcs)
2018 24.01 3,406.23
2019 24.03 4,253.25
2020 24.05 4,402.83

INTERPRETATION:

From the above equity analysis table it can be interpreted that,

By comparing between theses three years the equity share capital is gradually
increased .

NETWORTH OF BRITANNIA INDUSTRIES :

The networth of reliance industry yearly wise is

In the year 2018:3,406.23(in crs)
In the year 2019: 4,253.25(in crs)
In the year 2020: 4,402.83(in crs)

DEBT ANALYSIS FOR 3 YEARS OF BRITANNIA INDUSTRIES :

The debt analysis can be analysed by means of two parameters.They are

➢Secured loans.
➢Unsecured loans.

SECURED LOANS:

A secured loan is a loan in which the borrower pledges some asset as collateral for the loan,
which then becomes a secured debt owed to the creditor who gives the loan.

UNSECURED LOANS:
In finance, unsecured debt refers to any type of debt or general obligation that is not protected
by a guarantor, or collateralized by a lien on specific assets of the borrower in the case of a
bankruptcy or liquidation or failure to meet the terms for repayment.

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Years Secured loans(in Unsecured loans Total
cr) (incr) debt(incr)
2018 84.57 93.65 178.22

2019 61.92 76.10 138.02

2020 1,514.05 0.00 1,514.05

INTERPRETATION:
From the above debt analysis table it can be interpreted that,
In the year 2018 the secured loan is 84.57(in cr)and the unsecured loan is 93.65(incr) and the
total debt is 178.22(in cr).
In the year 2019 the secured loan is 61.92(in cr)and the unsecured loan is 76.10(incr) and the
total debt is 138.02(in cr).
In the year 2020 the secured loan is 1,514.05(in cr)and the unsecured loan is 0.00(incr) and
the total debt is 1,514.05(in cr).
And from the above table we can see that in the year 2020 there is no unsecured loan this is
because in the year 2018 and 2019 the no of unsecured loan is higher due to the borrower
owed the creditors position for about 93.65 and 76.10(in cr).so only the Britannia
industry have no unsecured loans in the year 2020.

TOTAL LIABILITIES OF BRITANNIA INDUSTRIES :

The total liabilities can be calculated by summation of both equity and debt

Debt ratio=Debt/Total× liability 100

Equity ratio=Equity/ Total liability ×100
Year Equity Debt Total Debt ratio Equity
liability ratio
2020 4,402.83 1,514.05 5,952.53 25.43% 73.96%

2019 4,253.25 138.02 4,423.95 3.119% 96.14%

2018 3,406.23 178.22 3,597.59 4.953% 94.68%

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Note:
Total liability is 3,597.59(in cr)has been taken as 100% then,
For the year 2018,
The debt ratio can be calculated by =178.22/3,597.59×100=4.953%
The equity ratio can be calculated by =3,406.23/3,597.59×100=94.68%
For the year 2019,
Total liability is 4,423.95(in cr)has been taken as 100% then,
The debt ratio can be calculated by=138.02/4,423.95×100=3.119%
The equity ratio can be calculated by=4,253.25/4,423.95×100=96.14%
For the year 2020,
Total liability is 5,952.53(in cr)has been taken as 100% then,
The debt ratio can be calculated by=1,514.05/5,952.53×100=25.43%
The equity ratio can be calculated by=4,402.83/5,952.53×100=73.96%

PROFIT AND LOSS ACCOUNT:

Britannia Industries
Standalone Profit & Loss account ------------------- in Rs. Cr. -------------------
Mar 20 Mar 19 Mar 18

12 mths 12 mths 12 mths

INCOME

Revenue From Operations [Gross] 10,820.57 10,389.49 9,276.17

Less: Excise/Sevice Tax/Other Levies 0.00 0.00 76.11

Revenue From Operations [Net] 10,820.57 10,389.49 9,200.06

Other Operating Revenues 166.11 92.96 104.00

Total Operating Revenues 10,986.68 10,482.45 9,304.06

Other Income 335.43 190.52 155.93

Total Revenue 11,322.11 10,672.97 9,459.99

EXPENSES

Cost Of Materials Consumed 5,052.67 4,944.77 4,405.17

Purchase Of Stock-In Trade 1,543.55 1,381.88 1,372.46

Changes In Inventories Of FG,WIP
61.51 -49.02 -4.18
And Stock-In Trade

Employee Benefit Expenses 368.87 321.64 294.87

Finance Costs 65.17 1.54 1.45

Depreciation And Amortisation Expenses 151.69 135.00 119.76

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Other Expenses 2,189.39 2,221.05 1,825.26
Total Expenses 9,432.85 8,956.86 8,014.79

Mar 20 Mar 19 Mar 18

12 mths 12 mths 12 mths

Profit/Loss Before Exceptional,

ExtraOrdinary Items And Tax 1,889.26 1,716.11 1,445.20

Exceptional Items 19.00 0.00 0.00

Profit/Loss Before Tax 1,908.26 1,716.11 1,445.20

Tax Expenses-Continued Operations

Current Tax 423.96 581.36 499.56

Deferred Tax 0.00 12.55 -2.25

Total Tax Expenses 423.96 593.91 497.31
Profit/Loss After Tax And Before
ExtraOrdinary Items 1,484.30 1,122.20 947.89

Profit/Loss From Continuing 1,484.30 1,122.20 947.89

Operations
Profit/Loss For The Period 1,484.30 1,122.20 947.89

Mar 20 Mar 19 Mar 18

12 mths 12 mths 12 mths

OTHER ADDITIONAL INFORMATION

EARNINGS PER SHARE

Basic EPS (Rs.) 61.75 46.71 78.96

Diluted EPS (Rs.) 61.73 46.68 78.92

VALUE OF IMPORTED AND INDIGENIOUS RAW

MATERIALS
Imported Raw Materials 0.00 0.00 0.00

Indigenous Raw Materials 0.00 0.00 0.00

STORES, SPARES AND LOOSE
TOOLS
Indigenous Stores And Spares 0.00 0.00 0.00
DIVIDEND AND DIVIDEND
PERCENTAGE
Equity Share Dividend 0.00 300.15 264.13

Tax On Dividend 0.00 61.70 53.78

Equity Dividend Rate (%) 3,500.00 1,500.00 1,250.00

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 EARNINGS PER SHARE:
It can be calculated by means of two aspects they are,
➢ Basic EPS
➢ Diluted EPS

c Equity share Basic EPS Diluted EPS

holders(in cr)
2018 24.01 78.96 78.92

2019 24.03 46.71 46.68

2020 24.05 61.75 61.73

From the above table it can be interpreted that earnings per share can be calculated by
comparing the equity share holders.
➢ when the equity share holder is increased the earning per share is decreased.
➢ When the equity share holder is decreased the earnings per share is increased.

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Profit before tax:
In the year 2018 profit is 1,445.20(in cr)
In the year 2019 profit is 1,716.11(in cr)
In the year 2020 profit is 1,908.26(in cr)

Total tax expenses:

In the year 2018 tax is 497.31(in cr)
In the year 2019 tax is 593.91(in cr)
In the year 2020 tax is 423.96(in cr )

Profit after tax:

In the year 2018 profit is 947.89(in cr)
In the year 2019 profit is 1,122.20(in cr)
In the year 2020 profit is 1,484.30(in cr)

Year PBT(in cr) Tax(in PAT(in cr) PBT Tax in PAT Tax in
cr) ratio ratio
2018 1,445.20 497.31 947.89 34.41% 52.46%

2019 1,716.11 593.91 1,122.20 34.60% 52.92%

2020 1,908.26 423.96 1,484.30 22.21% 28.56%

From the above table it can be interpreted that the tax is decreasing yearly wise.

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TAX RATIO CALCULATION:

PROFIT BEFORE TAX RATIO:

In the year 2018, the profit is 1,445.20( in cr) take it as 100%

Tax ratio of PBT=tax/ PBT×100=497.31/1,445.20×100=34.41%
In the year 2019,the profit is 1,716.11(in cr) take it as 100%
Tax ratio of PBT=tax/ PBT×100=593.91/1,716.11×100=34.60%
In the year 2020,the profit is 1,908.26(in cr) take it as 100%
Tax ratio of PBT=tax/ PBT×100=423.96/1,908.26×100=22.21%

PROFIT AFTER TAX RATIO:

In the year 2018, the profit is 947.89( in cr) take it as 100%

Tax ratio of PAT=tax/ PAT×100=497.31/947.89×100=52.46%
In the year 2019,the profit is 1,122.20(in cr) take it as 100%
Tax ratio of PAT=tax/ PAT×100=593.91/1,122.20×100=52.92%
In the year 2020,the profit is 1,484.30(in cr) take it as 100%
Tax ratio of PAT=tax/ PAT×100=423.96/1,484.30×100=28.56%

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CONCLUSION :

The choice of capital structure matters to a private company. It directly

influences a company's ability to create shareholder value because the balance sheet sets the
minimum threshold for a company's cost of capital. Investments in the business must meet
this threshold, or value is destroyed.

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