Using the Target Capital Structure Funding Method The Target Capital Structure Funding Method applies cash surpluses by funding accounts category: debt, equity, and preferred. You can create target level and prioritize the order of funding categories (for example, target debt-to-total capital). Strategic Finance calculates each category target level, and applies surpluses to deficits in each category based on ordered priority.
To entering Target Capital Structures: Access Funding Options.
Accessing Funding Options.
information exists and Standard is selected in the Common field. See Funding Method to Use Using the Standard Funding Method. Select Target Capital Structure. Select a funding account Category : In Treatment of Preferred Stock, select a method of treating preferred stock: —All preferred accounts are debt. Preferred is unavailable. Allocate Preferred as Debt —All preferred accounts are equity. Preferred is unavailable. Allocate Preferred as Equity —Preferred accounts are independent from the Debt and Equity accounts. Allocate Preferred Separately, Overflow to Debt —Preferred accounts are independent from the Debt and Equity accounts. Allocate Preferred Separately, Overflow to Equity Notice that the funding accounts for the category you selected are listed with the account number and type. Under Surplus select accounts providing cash, and under Deficit, select accounts receiving cash.
Some accounts may not be included in the funding lists. For example, Term Debt cannot be used in the funding lists as a source of funding.
Optional: Click and drag on the account names to reorder. and Apply Surplus in Category to... display the order in which these accounts are processed. See Fund Deficit in Category with... Order of Repayment and Funding. Click OK.
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