In the balance sheet we represent the assets and liabilities of the company. Thus, the first are the assets, collection rights and the money available to the company. The second are your net worth and payment obligations in their different installments.
It is precisely this structure of the liabilities that represents the way in which the company finances the assets. Therefore, they are the own and foreign capitals that allow the purchase of machinery, a car or merchandise, among others.
Own resources of others
Two essential concepts, when we talk about the capital structure of a company, are the own and external resources that make it up. In this way, one of the most relevant information provided by the balance sheet is related to them.
Net worth is the company’s own resources. It is made up of share capital (partner contributions), reserves, undistributed profits or capital grants and value adjustments. As we can see, they are debts that the company has with itself.
On the other hand, we have non-current and current liabilities. These are made up of the long-term and short-term debts you have with banks, creditors or suppliers. They are outside resources, since we owe them to people or entities outside the company.
The capital structure and the real value of the company
As we have mentioned, the company has assets, net worth and liabilities and with the latter it finances the former. However, to value it, we must know what assets and collection rights we have, and discount what we owe at this value.
For this reason, we must know the capital structure, because the debt that we must deduct is only external. This is so because the internal, the own resources, we owe to ourselves or to the partners, and in reality they reflect the net value of our company.
Therefore, this value will be the difference between assets and liabilities, which corresponds to its net worth. Thus, the true value of the company is what it has minus what it owes. We will see it more clearly in the example.
Example: Capital structure of a computer store
Let’s see, finally, an example of a computer store. In your balance appear the assets you have, such as the delivery car, the equipment they use (Epi’s) or the merchandise. In liabilities, the net worth (own resources) and its debts (external resources).
We see that the capital structure of this company is based on just over 70% of its own resources, especially the social capital (contributed by the partners) and almost 30% of external resources. This situation may seem very solvent, but it will always depend on the sector in which it operates.