Assignment 2 Discussion Corporate Financial Structure Though corporate capital structure also called capitalization and corporate financial structure are september 2023
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Assignment 2: Discussion—Corporate Financial Structure Though corporate capital structure (also called capitalization) and corporate financial structure are closely related, they do have some significant differences. Financial structure is determined from the full liabilities and equity position on the firm’s balance sheet, looking at the total liabilities, both long- and short-term and the equity used to fund the organization. Whereas corporate capital structure looks at the mix of equity and long-term liabilities—primarily debt. In other words, capitalization is the portion of funds raised by selling shares and financial structure is the portion raised by selling bonds. Determining the optimal financial or capital structure for a domestic U.S. firm requires in-depth analysis of a variety of factors. For multinational or global firms, the analysis can be much more complex than for domestic business organizations. As a member of the finance team for the MNC Getting Bigger All The Time, Inc. (GBATT ), you have been asked by the Chief Financial Officer (CFO) to lead a general discussion on some of the complications and different risks in capitalizing an MNC and managing its financial structure. The CFO has asked that you specifically cover the risks associated with currency denominations, economic and legal issues, and the different government roles. The CFO recommended a couple of sites for gathering information. Organization for Economic Cooperation and Development (OECD) http://www.oecd.org International Monetary Fund (IMF) http://www.imf.org Using the module readings, Argosy University online library resources, the Internet, and the sources cited above, do the following: Explain, with examples, how risks associated with currency denominations, economic and legal differences between countries, and the different governments’ roles and attitudes toward business can affect MNCs’ risks, capital structure and financial structure decisions.
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