What Is Market Value Capital Structure?
The market value capital structure--how a company finances its operations--is a useful way to value a company in both good and bad economic environments. Simply stated, it subtracts a company's liabilities (claims) from the value of its assets, but in considerable detail.
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Assets
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Assets are items that add value to a company. They can range from items such as buildings, land, equipment, inventory and fixtures, to cash (savings) and even ownership (equity) in other businesses.
Liabilities
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Liabilities are claims that another party has to a business. These claims can be loans from financial institutions (whether secured or unsecured), bonds that have been issued or stock that is issued to other interested parties (whether public or private).
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Financial Analysis
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The purpose of MV Capital Structure is to illustrate different layers of assets and liabilities. Companies that might carry little to no debt and who are able to fund continued expansion/growth from earnings and cash flow can be considered to be less risky than companies who are highly leveraged with debt.
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