MCI Communications Corporation: Capital Structure Theory
As we delve into this particular case study, it is important that the reader understand the definition of 'Capital Structure' and what it means in this special context. This idea can be defined as the mix of the various debt and equity capital maintained by a firm, also sometimes referred to as financial structure. The composition of a corporation's securities used to finance its investment activities; the relative proportions of short-term debt, long-term debt, and owners' equity (Ross). The winds of change were in the air. MCI Communications Corporation was looking to modify the status quo. Throughout most of 1995, MCI's stock had been a sluggish performer in an otherwise buoyant market (MCI). The company was looking for advice from a longtime trusted investment firm on what would be the best agenda to follow in order to repurchase a portion of the company's outstanding common stock.