Capital Structure analysis of a Micro and Partnership Enterprise – A case study of Power Plant Engineering Works

The financial manger has to strike a balance between various sources of funds so as to maximize return of an Enterprise without affecting risk composition in the business. An optimal capital structure is very much essential to maximize the owner’s wealth of any Enterprise. In this paper, an attempt is made to analyze the capital structure in Power Plant Engineering Works. Power Plant Engineering Works is a reputed Indian electric transformer manufacturer company catering to people in Visakhapatnam, Kakinada, Rajahmundry, Srikakulam and Vizianagaram regions of Andhra Pradesh. It is a Micro and Partnership enterprise. Its institutional clients include big giants like VCTTL, CPWD and BHEL. In this paper composition of capital structure in the enterprise for a period of ten years is analyzed. Leverage analysis was also done. Debt- Equity ratio, Proprietary Ratio, Solvency Ratio, Fixed Assets to Net worth Ratio, Fixed Assets Ratio, Current Assets to Proprietary Ratio and Interest Coverage Ratio are calculated for the study period. Chi-square test is used for testing Hypotheses.