Financial Accounting and Reporting - Business Environmental Concepts DB

A firm’s capital structure is the mix of financial securities used to finance its activities. The mix will always include common stock and will often include debt and preferred stock. The firm may have several classes of common stock, for example, with different voting rights and, possibly, different claims on the cash flows available to stockholders.

Perform a preliminary search and discuss the following question:

1. Discuss the meaning of the Optimal Capital Structure.
2. Discuss the Modigliani and Miller Propositions.
3. What the M&M Propositions Tell Us.
4. Select 2 companies in the same industry. Using the Internet, conduct research to find the companies' current balance sheets, explain their capital structure, and calculate their EPS.
5. Based on your research, which company has better financial position. Please discuss why.

In your own words, post a substantive response to the Discussion Board question(s) and comment on other postings. Your response should address the DB question(s) and move the conversation forward. You will be graded on the quality of your postings, including mastery of the concept as well as critical thinking. If asked for your opinion, do not simply state that it is a good or bad idea; elaborate on your reasons and argument. Include enough detail to substantiate your thinking as well as your position on the questions or comments.

For assistance with your assignment, please use your text, Web resources, and all course materials.