Does the mixture of debt and equity in a firms financial structure Essay - 1

Does the mixture of debt and equity in a firms financial structure matter why - Essay Example There must be a certain proportion of debt and equity in the balance sheet of a company. Variation in the debt and equity ratio of the firm can be seen at the arrival of a firm’s tangible assets and the reduction of its intangible asset. A company with large amount of purchased goodwill forms heavy acquisition activities which may end up with forming a negative equity position for the company. Suppose a firm has a long term debt of $3000 and the value of its assets is $12,000, its debt to equity ratio is 0.25. This ratio indicates that the firm’s 25 percent assets have been financed through debt. If a company debt to equity ratio is greater than one, this means that majority of the firm’s assets have been financed by debt and therefore there are increased chances of bankruptcy. Such firms are considered riskier in terms of investment in the sight of investors and financial institutions. A company with a balanced debt to equity ratio is considered healthy in the eyes of the investors and lenders. The mixture of debt and equity is considered to be important with respect to the firm’s financial structure as it is used as a standard for judging the financial performances of companies. It measures the ability of the firm to be able to repay its debt or not. If the debt to equity ratio of a firm is increasing this indicates that the firm’s assets are rapidly being financed by the debt rather than the company’s own finances. The lenders and investors would rather give preference to companies with low debt to equity ratio because their interest would be better protected in the case of business decline. Therefore the companies with low financial leverage ratio are able to attract more investors (Debt-to-Equity Ratio). The optimal financial leverage ratio is 1. This means that all the long term liabilities of a company are equal to its assets. This ratio may vary from industry to industry, as it also

Twelve Security Attack Trends of 2011 Essay Example | Topics and Well Written Essays - 2000 words

Twelve Security Attack Trends of 2011 - Essay Example People involved in the business of hacking widely adopt this attack. Security products are not yet able to launch any remedy for it (ComputerWeekly 2010) The second security threat is about file security which is from sharing of files, applications and database that is growing at the rate of 60% annually. File sharing is getting popular day by day specially after launching of Microsoft product Sharepoint. Expansion of Payment Card Industry (PCI) Data Security Standard (DSS) technology to organizations and files besides databases and web applications have open new doors for the attacks Careful measures are needed to protect attacks such as data thefts and files manipulations (ComputerWeekly 2010) The third security threat is from the growth of Smartphones market due to its integration with various web applications and global databases. Intimation to consumers about completion of each and every transaction in their account through SMS messaging services has generated new opportunities for hackers who could use the path of sending data outside the domain for attack. This path of data transition can be used by intruders for data theft and unauthorised access (ComputerWeekly 2010) The fourth security threat is from cloud computing as the large infrastructure of information technology is now rapidly shifting to cloud where hackers and intruders are already present. They will come side by side and the chance of security breach will increase. Opportunities for attacking will develop with the development of consumers and customers of cloud computing (ComputerWeekly 2010) The fifth security threat is from insider. The high rate of job loss due to economic recessions have built a huge source of people who are frustrated and disgruntled and ready to take revenge or make money. The economic pressure and opportunities for selling information may pose serious threats to their previous employers (ComputerWeekly 2010) The sixth security threat is from social networks which have attacked privacy of many people by collecting information in the name of personal profiles. Tricks such as false promises and incomplete information are used to attract people for collection of personal information (ComputerWeekly 2010) The seventh security threat is from convergence of regulations of most countries and to have global laws for data security and privacy. This can bring many more opportunities for intruders and hackers (ComputerWeekly 2010) The eighth security threat is from the separation of cyber security and business operations. Keeping cyber security apart from business operations has created huge opportunities for hackers and individuals. The trend of making cyber security the part of business operations is developing rapidly for example Intel Corporation made acquisition of McAfee and HP of Fortify (ComputerWeekly 2010) The ninth security threat is from the proactive approach of security practitioners which has although helped in catching more hackers, created strong professional ‘bar’ of hackers (ComputerWeekly 2010) The tenth security threat is from the attacks of hackers on industry. Success of industrialized hackers has encouraged many more hackers to learn and adopt this approach (ComputerWeekly 2010) Figure 1 shows the extract from (ComputerWeekly 2010) which describes the above ten security threats of 2011 Figure 1: Extract (ComputerWeekly 2010) The eleventh security threat is from cyber war which began with the leakages of Stuxnet and