Question

What is capital structure? Access the balance sheet of any public company or the target company you might have chosen for your due diligence report and discuss what is the capital structure of that company.

Answer 1

Capital structure of a company means the proportion of outside borrowings called debt & owners' funds called equity , that are sources of finance, for any business--ie. It is made up of long-term & short-term borrowings which are to repaid as well as permanent equity from shareholders or owners---both of which appear on the liability side of the company's balance sheet.

For example, we shall discuss the latest balance sheet of Intel Corporation .

	Dec 29,2018		Dec 30,2018
Current liabilities		16626		17421
Debt	25,098		25,037
Contract liabilities	2,049		0
Income taxes payable, non-current	4,897		4,069
Deferred income taxes	1,665		3,046
Other long-term liabilities	2,646		3,791
Commitments and Contingencies
Temporary equity	419		866
Total long-term liabilities		36,774		36,809
Stockholders’ equity:
Preferred stock, $0.001 par value, 50 shares authorized; none issued	0		0
Common stock, $0.001 par value, 10,000 shares authorized; 4,516 shares issued and outstanding (4,687 issued and outstanding in 2017) and capital in excess of par value	25,365		26,074
Accumulated other comprehensive income (loss)	-974		862
Retained earnings	50,172		42,083
Total stockholders’ equity		74,563		69,019
Total liabilities, temporary equity, and stockholders’ equity		127,963		123,249

From the above, we can infer that the financing /capital structure of Intel Corporation consists of :

1.current liabilities ,ie. that are incurred during the course of operations , to the extent of $ 16626

2.long-term liabilities , ie. They can be deferred fo rpayment , beyond the current fiscal year, for $ 36774   &

3. Owners'funds or shareholders' equity for $ 74563.

these are the various amounts that have been incurred to carry on the regular operations , for which Intel was formed as well as for acquiring the fixed assets necessary to aid those operations.