Capital Structure Analysis of a Small Enterprise – A case study of Maitreya Electricals Private Limited

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 Maitreya Electricals Private Limited. Maitreya Electricals Private Limited is a small enterprise located in Andhra Pradesh state of India. This company is a manufacturer and repairer of Electrical Transformers. Its head office is located in Vijayawada of Krishna district. It was established in the year 1990. This Enterprise has an annual turnover of Rs. 221.33 lakhs as per 2015-16 annual accounts. The total assets of the company are Rs. 192.3lakhs and total liabilities are Rs. 192.3lakhs. 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.