Crossroads

At the intersection of technology, finance and the Pacific Rim.

Thursday, February 19, 2009

Capital Structure

We are studying how business models affect financial performance and capital structure over the next two weeks. The blog site Seeking Alpha reviews the mining industry in this way:

Last year should have made just about every CFO in the world take out their old text books to review the Modigliani-Miller theorem in order to review proper capital structures. Most Business models that relied extensively on debt financing were destroyed in 2008 and those not officially destroyed in 2008 are going to be struggling for the foreseeable future. I am not sure that debt driven business models will ever come back, let alone come back in the next 10-15 years.

other references:
http://www.reuters.com/finance/stocks/overview?symbol=RTP.N

http://commodities.thefinancials.com/

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