Corporate finance deals with the capital structure of a corporation, including its funding and the. actions that management takes to increase the value of the company. Corporate finance also. includes the tools and analysis utilized to prioritize and distribute financial resources.
Simply put, capital structure is a measurement used to determine how much debt and/or equity a business employs to finance its operations. Let's look at
Debt Capitalization
Debt, the other portion of capital structure, determines the accumulative amount of capital owed to creditors.
Debt is first broken down into two categories: current liabilities, due within a year’s time, and the rest of the liabilities that mature in over a year.
Coca-Cola’s 10-Q from October 2022 shows the company to have $26.44 billion in curren.
,
Enterprise Value
Enterprise value (EV) is a measurement often employed by investment bankers to determine a company’s price if it were to be put on the market.
EV is calculated by finding the sum of a business’s market cap and its net debt.
Net debt is found by subtracting the cumulative value of a corporation's liabilities and debt from its total cash and cash equ.
,
Leverage
Despite this debt, Coca-Cola’s ability to pay off its current liabilities has actually increased.
Coca-Cola's current ratio(a comparison of a company’s current assets to its current liabilities) is 1.12, which is generally considered normal for the industry.
This means that Coca-Cola has $1.12 in liquid assets to cover every dollar of current debt..
