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Learning in Humanitas

Today we will discuss the "Capital Structure and Cost of Capital" in the Business Valuation class: Directors of the 13th Trimester of the Administration and Accounting career at Universidad Humanitas.

To better understand, we will explain the definitions of each of the concepts related to the topic, their importance within the decisions of a company and their relevance to the Structure and Cost of Capital. Let's start with the following sub-items: capital, liabilities, assets, net worth and cost.


CapitalCapital is called the element necessary for the production of consumer goods and consists of machinery, real estate or other type of facilities.The types of capital are classified in:

    
Current Capital: The one that is exhausted in production and must be replaced.
    
Fixed Capital: It is a long term wear and does not run out of production.
    
Variable Capital: It is the one that is exchanged for a labor or the salary that is paid to the employees.
    
Constant Capital: Investment made in machinery, raw materials, etc.passiveThe liability consists of all obligations contracted by a company either for loans granted to the assets of the company or can also originate from loans with financial institutions.The liability is divided into:


    
Current or Short-Term Liabilities: These are debts or other obligations that the company must liquidate within the commercial period, usually one year.



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For example:
            
Accounts Payable Vendors
            
Income tax payable
            
Short-term payables
            
Withholdings and accruals payable
            
Short-term payables
            
Short-term payable mortgages
            
Dividend payable
            
Contingencies payable in the short term.
    
Long-Term Liabilities: These are made up of those debts or other obligations that are not going to be paid within the commercial cycle, that is, they will be paid within several years. Among the most common long-term liabilities are:
            
Long-Term Payables
            
Long-Term Payables
            
Long-Term Payable Mortgages
    
Deferred Liabilities: These are made up of debts whose payment is deferred beyond a legal or customary date, such as a deferred tax. "Business Interests in Advance" and "Incomes collected in advance" are considered.ActiveIt is the set of economic assets, rights receivable that owns a company and those expenditures that will be used in future years. In other words, it is a resource controlled by the entity as a result of past events that are expected to have future economic benefits. Examples: Cash, Banks, Trademarks, Inventories and Receivables.


 Net WorthAccording to the online Dictionary of Expansion, Net Equity is defined as the residual part of the assets of the company, after deduction of all its liabilities, including contributions made during its incorporation or later by its partners or owners who do not Consider as accumulated liabilities or other changes. In other words, it is the difference between the assets and the liabilities that represent the amount of which the partners are owners if all the properties of the company were sold and the debts were paid.The basic characteristics of net worth are:

    
Your financing is not demandable
    
At first there is no financial cost like that of debts but there is the opportunity cost.
    
It should be used for long-term foreign financing (non-current liabilities), to finance non-current assets and to cover a reasonable margin of the company's current customer.

 
It consists of three axes:

    
Own funds that may have been contributed by partners or owners (capital) or be accumulated results that have not been distributed (reserves and results for the year)
    
Adjustments due to changes in value
    
Grants, donations and heritages received.costIt is known at a cost as the value sacrificed to acquire goods or services by reducing assets or by incurring liabilities at the time benefits are obtained.Now, let's review the themes of the day:

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