RESTRUCTURING

RESTRUCTURING AND COST OF CAPITAL.

RESTRUCTURING INVOLVES MORE THAN TECHNOLOGY AND ORGANIZATIONAL ARRANGEMENTS. IT ALSO CONCERNS HOW THE COMPANY IS FINANCED – THE DEBT/EQUITY RATIO AND THE COST OF CAPITAL.

THE BUSINESS FIRM IS AN ENTITY OF INTERRELATED CASH INFLOWS AND OUTFLOWS. CONSEQUENTLY, REDUCING THE COST OF FINANCING HAS THE SAME EFFECT AS REDUCING THE COST OF PRODUCTION OR INCREASING SALES.

OUR COMMENT : NO GAIN IS SO CERTAIN AS THAT WHICH PROCEEDS FROM THE ECONOMICAL USE OF WHAT YOU ALREADY HAVE.

PHLDUCX