Question

Outline the capital structure choices open to international firms. In your own words, give an example using an actual company.

In your own words and no Plagiarism

Answer 1

Answer-

Most international firms are open to variety of capital structure choices the following are example of these choices;

Increasing equity or lowering debt

Increasing debt or decreasing equity.

We know that capital structure include references to debt-to-equity ratios, let's say for example the XYZ company has completed an initial public bond offering and this was brought about by cheeping into more debts now the ratio will change in the essence that the company value will increase and also the debt.

Explanation:

We know that capital structures are mostly purposed for maximizing firm's capital. Capital structure are usually composed of debt (mostly in form of bonds) and equity (mostly in form of stocks). So this are choices that do not interfere or depend on the company's project to maximize project but they involve playing with the debts and equity to do the same role. The above capital structure choices are open to international firms simply because they are capable of issuing more equity to the markets (increasing equity) making easy for them to pay the dues thus lowering debts and on the other hand borrowing of more debts to repurchase shares this will in turn reduce the equity.