Google Capital Structure Analysis
CAPITAL STRUCTURE ANALYSIS -
GB550: Financial Management
Prof. Dale Prondzinski
MBA Candidate | Class of 2012i iiiiii
Graduate School of Business | Kaplan University Online I fiii iand Management| GB540i fi iiiiiiiiiiiiiiii
Apr 6, 2012
Jason’s Portfolio Note on April 16, 2012:
The course project involved developing a great depth of knowledge in analyzing capital structure, theories behind it, and its risks and issues. Before I began this assignment, I knew nothing but a few things about capital structure from previous unit weeks; however, it was not until this course’s final project that came along with opening …show more content…
Since Google’s optimal capital structure is that of the mix of debt and equity that maximizes the stock price, to ensure that structure is financially supported, debt and equity must specifically be measured. And to better understanding how to direct a manager’s abilities and effort to more accurately close in to more out-earnings of its cost of capital and/or positive changes in economic value added (EVA) and this applies if any should exist for any firms.
The amount of debt totaling up over the years for Google has barely dented the amount of equity value it holds. For instance, long-term debt began to show an increase for Google in 2011 with an amount of $2.9 billion from a $0 start in 2010. For simplicity, a combined debt amount of long and short-term debt which includes notes payable should do its justice for Google and the total debt in 2011 amounted to $4.2 billion. This debt is against a goliath economic value when in contrast with common equity amount of $58.15 billion.
2.1 Preview of Capital Structure Issues
A corporation’s finance is subjected to a specific target of capital structure and it is no doubt towards the optimal one and direct with the measure of value which