A study on capital structure of automotive pvt ltd
ABSTARCT :
Capital structure is a vital aspect of financial management, referring to the combination of debt and equity a firm uses to finance its operations and growth. In capital-intensive industries like automotive manufacturing, these decisions significantly influence a company's financial health, risk exposure, and profitability. Automotive Pvt Ltd, a rising entity in the Indian automotive sector, operates in a highly competitive and dynamic environment, where strategic financial decisions are critical for sustaining expansion and innovation. The company’s long-term investments in technology, production facilities, and product development require substantial capital. Therefore, an in-depth study of its capital structure is necessary to understand how it balances cost and risk in funding its operations.
This study aims to analyze the capital structure of Automotive Pvt Ltd, focusing on the composition of its debt and equity, trends over the past five years, and the rationale behind its financing decisions. Key financial metrics such as debt-equity ratio, interest coverage ratio, and return on equity will be assessed to evaluate leverage and solvency. The study will also explore the internal and external factors influencing these decisions, including profitability, asset base, market conditions, tax policies, and growth opportunities. Theoretical frameworks such as the Modigliani-Miller theorem, the trade-off theory, and the pecking order theory will provide the conceptual foundation for this analysis.
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