Capital Structure Basic Concepts推荐.pdfVIP

C H A P T E R 15 Capital Structure Basic Concepts In early 2006, conglomerate Tyco International, Ltd., was in costs associated with the breakup, Tyco would have evaluating a plan to break up the company. The breakup about $12.5 billion in total debt to allocate. The company would result in three separate companies: electronics, offered little guidance on the capital structures it planned health care, and fire and security services. Under the for new companies, other than to say the debt for each plan Tyco’s shareholders would end up with shares in company would have “solid investment grade” ratings. the three new companies. But one looming question So how should a company choose a capital structure for was how the company would split its existing debt load itself or, in Tyco’s case, for its offspring? We will explore among the three new companies. With the current this and other issues in this chapter. debt on its balance sheet and an additional $1 billion 15.1 The Capital Structure Question and the Pie Theory How should a firm choose its debt–equity ratio? We call our approach to the capital structure question the pie model. If you are wondering why we chose this name, just take a look at Figure 15.1. The pie in question is the sum of the financial claims of the firm, debt and equity in this case. We define the value of the firm to be this sum. Hence the value of the firm, V, is: V B S