Capital Structure

⚠️ **Finance warning / Avertissement finance** : informational only, not investment advice. A target structure is an analytical conclusion, not an instruction to borrow or repay: leverage decisions carry real default and covenant risk, and no metric or comparison here is a promise of return or a recommendation to restructure. Curated by Skill Harbor: the capital structure skill of the investment banking pack in andreworia/claude-finance-skills. Use it when you need to read a company's existing mix of debt and equity or reshape it toward a target: assessing debt capacity for an acquisition, evaluating a refinancing, or advising on whether a balance sheet is under or over-levered. The method runs in eight steps. It builds the current structure by instrument in priority order (each debt tranche with balance, coupon, maturity and security, then equity by class), computes net debt with gross and net shown separately so the cash position stays visible, and calculates leverage on normalized EBITDA (net debt to EBITDA, plus gross and capex-adjusted variants where relevant) with any add-backs noted, since aggressive adjustments flatter leverage. Interest coverage tests how comfortably the company services debt through a downturn. The cost of each component follows: after-tax cost of debt per tranche using the coupon and the tax shield, cost of equity via CAPM, blended into WACC at market-value weights, with an explicit pitfall warning against book weights, and the inputs stated so the number can be checked rather than taken as a black box. The target structure is set from debt capacity, covenant headroom and where comparable companies sit, with the standard that a good target is one the company can actually reach from current cash flow, and the comparison states the change in leverage, coverage and WACC, the incremental debt capacity or paydown implied, and the practical steps to get there: refinance, raise, or repay. The worked example in the file is fictional and illustrative. From the andreworia/claude-finance-skills repository (MIT). Honest caveats: the debt schedule, cash balance, normalized EBITDA and market inputs are yours to supply and to check; normalized EBITDA is exactly where optimistic add-backs hide. Skill Harbor never reviews the code, review it yourself before use.