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Describe The Two Components Of Financial Restructuring? |
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Answer» Debt restructuring:Debt restructuring is the process of reorganizing the whole debt capital of the company. It involves RESHUFFLING of the balance sheet items as it contains the debt obligations of the company.??A company??s financial manager needs to ALWAYS look at the options to minimize the cost of capital and improving the efficiency of the company as a whole which will in turn call for the CONTINUOUS review of the debt part and recycling it to maximize efficiency. Equity restructuring:Equity restructuring is the process of reorganizing the equity capital. It includes reshuffling of the shareholders capital and the reserves that are appearing in the balance sheet. Restructuring of equity and preference capital becomes a complex process involving a process of LAW and is a highly regulated area. Debt restructuring:Debt restructuring is the process of reorganizing the whole debt capital of the company. It involves reshuffling of the balance sheet items as it contains the debt obligations of the company.??A company??s financial manager needs to always look at the options to minimize the cost of capital and improving the efficiency of the company as a whole which will in turn call for the continuous review of the debt part and recycling it to maximize efficiency. Equity restructuring:Equity restructuring is the process of reorganizing the equity capital. It includes reshuffling of the shareholders capital and the reserves that are appearing in the balance sheet. Restructuring of equity and preference capital becomes a complex process involving a process of law and is a highly regulated area. |
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