A company is always eyed by stock investors and it is the balance sheet that validates the credibility and the growing potential of the same. In most cases, asset performance, capital structure, and working capital are the basic evaluated factors. When a company starts off, it might be higher of debts and low on equity; thereby resulting in a particular capital structure.
Upon evolution, the balance sheet changes, with the debts minimizing and equity growing at a substantiated rate. This is when it becomes important to change the capital structure, to maintain the desired levels of transparency, in front of the investors, shareholders, and even internal or external stakeholders.
From the perspective of an organization, the Capital structure is basically the net sum of the DO or Debt Obligation and the TSE or the Total Shareholders’ Equity. As these values keep changing with time, structural changes to the capital become all the more important.
