What does recapitalization mean?

What does recapitalization mean?

Recapitalization is the restructuring of a company’s debt and equity ratio. The purpose of recapitalization is to stabilize a company’s capital structure. Some of the reasons a company may consider recapitalization include a drop in its share price, to defend against a hostile takeover, or bankruptcy.

What is a recapitalization rate?

Recapitalization rate – the number of years required to replace or renovate facilities at a given level of investment. The recapitalization rate is computed by diving recapitalizable plant replacement value by total restoration and modernization investments. See also: Reinvestment.

What is recapitalization accounting?

Recapitalization accounting is a method of avoiding “push-down” of purchase accounting adjustments (i.e. write-up of assets) into a target company’s standalone financial statements. Eliminates future income statement charges for higher depreciation, resulting in higher reported net income for the target company.

What is recapitalization in private equity?

Definition: A Recapitalization or Recap is a financing technique used typically by private equity investors to invest in privately-held businesses that allow the existing owner to restructure the debt and equity of their company to either obtain new capital for future business growth and/or to reduce their personal …

What is a recapitalization quizlet?

Recapitalization is restructuring a company’s debt and equity mixture, often with the aim of making a company’s capital structure more stable or optimal.

Why do banks recapitalize?

Recapitalisation of Banks is injecting additional capital into state-owned banks to bring them up to capital adequacy standards. The government injects capital into banks that are short on cash using a variety of instruments.

What should a firm’s target capital structure do?

The target capital structure of a company specifies how much the corporation will borrow, what kinds of debt it will carry and how much money the shareholders must contribute. Capital structure decisions are among the most important strategic selections a company can make.

Which of the following events would be most likely to encourage a firm to increase the amount of debt in its capital structure?

Other things held constant, which of the following events is most likely to encourage a firm to increase the amount of debt in its capital structure? The corporate tax rate increases.

What is recapitalization of public sector banks?