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kindly define capital structure and how to compare for two companies for the past 5 years, like for instance in a case of Mediclinic international PLC and GlaxoSmithKline company both in the pharmaceutical sector.
Hi,
Capital structure looks at how the business has been funded. There are two sources of funding being debt and equity.
We wouldn’t just directly compare the capital structure of two companies, as it all depends on the return that is generated by the invested funds. Therefore the best way to measure how well the invested capital has been used is by the return on capital employed (ROCE).
Thanks
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