Capital Structure Strategies

 Objective: For this assignment, you will create a Capital Structure Strategies for a Community Health Center that you will be able to choose (Any Health Care Facility). The Capital Structure Strategies refers to the way a corporation finances its assets through some combination of equity, debt, or hybrid securities. A firm’s capital structure is the composition or ‘structure’ of its liabilities. For example, a firm that sells 20 billion dollars in equity and 80 billion dollars in debt is said to be 20% equity-financed and 80% debt-financed. The firm’s ratio of debt to total financing, 80% in this example, is referred to as the firm’s leverage. In reality, capital structure may be highly complex and include dozens of sources. Gearing Ratio is the proportion of the capital employed by the firm which comes from outside of the business, such as by taking a short term loan. You are encouraged to choose (Any Health Care Facility: Hospital, Doctor Office, Emergency Care Center, etc.). ASSIGNMENT GUIDELINES (2 points /10%): Students will create a Capital Structure Strategies for the Institution of your choosing. There is an advantage to financing with debt (the tax benefits of debt) and that there is a cost of financing with debt (the bankruptcy costs and the financial distress costs of debt). The marginal benefit of further increases in debt declines as debt increases, while the marginal cost increases, so that a firm that is optimizing its overall value will focus on this trade-off when choosing how much debt and equity to use for financing. Empirically, this theory may explain differences in Debt/Equity ratios between industries, but it doesn’t explain differences within the same industry. You need to read the article (in the additional weekly reading resources localize in the Syllabus and also in the Lectures link) assigned for this week and develop a 3page paper reflecting your understanding and ability to apply the readings to your Health Care Setting. Each paper must be typewritten with 12-point font and double-spaced with standard margins. Follow APA format when referring to the selected articles and include a reference page. EACH PAPER SHOULD INCLUDE THE FOLLOWING: 1. Introduction (5 points / 25%) Offer an abstract that provide a brief outlook of the protocol and explaining in your own words what is meant by a Capital Structure Strategies in Health Care Financial System 2. Your Capital Structure Strategies in Health Care Financial System (10 points 50%) a. Presentation Page: PROJECT NAME ORGANIZATION NAME BUSINESS ADDRESS CITY, ST, ZIP TELEPHONE NUMBER FACSIMILE NUMBER WEBSITE ADDRESS EMAIL ADDRESS: b. Capital Structure Theory: Definition, Explanation and uses. c. The Capital Structures Strategy of leading integrated health care system.