The following table presents Engies (an energy company) financial information.

Statement of Financial Position

Income Statement

Based on the above:

a. Appraise Engies capital structure using the tools discussed in the module.

b. Critically evaluate theoretical advantages and disadvantages of the companys capital structure with regards to the debt and equity structure of the business. How these advantages and disadvantages apply to the specific company?

ASSETS in milions of euros Notes Dec 31, 2017 Dec. 31, 2016 Non-current assets Goodwi 12 17.285 17,372 Intangible assets.net 13 6.504 6,609 Property, plant and equipment net 14 51.024 57,739 Available for sale securites 15 2,656 2,997 Loans and receivables at amorized cost 15 2.976 2,250 Derivative Instruments 15 2.948 3,500 Investments in entities accounted for using the equity method 3 7,409 6,624 Other assets 25 567 431 Deferred tax assets 10 803 1,250 TOTAL NON-CURRENT ASSETS 92,171 98,905 Current assets Loans and receivables at amorized cost 15 599 595 Dervative Instruments 15 7,378 9,047 Trade and other receivables, net 15 20,311 20,835 Inventories 25 3,656 Other assets 25 8,492 10,692 Financial assets at fair value through Income 15 1,608 1,439 Cash and cash equivalents 15 8,931 9,825 Assets classifed as held for sale 4 6.687 3,506 TOTAL CURRENT ASSETS 58,161 59,595 TOTAL ASSETS 150,332 158,499 NB: The amounts shown in the tables are expressed in millions of euros. In certain cases, rounding may cause non-material discrepancies in the totals. LIABILITIES in milions of ups Notes Dec 31, 2017 Dec 31, 2016 Shareholders eu 36,639 39,578 Non-controlling interests 2 5,938 5,870 TOTAL EQUITY 17 42.577 45,447 Non-current abilities Provisions 18 18.428 19,461 Long-term borrowing 15 25 292 24,411 Derivative Instruments 15 2.980 3,410 Other finandal labres 15 32 200 Other labies 25 1,009 1,203 Deferred tax Illables 10 5.220 6,775 TOTAL NON-CURRENT LIABILITIES 52.950 55,461 Current llables Provisions 18 3,340 2,747 Short-term borrowings 15 8,176 12.539 Denvative Instruments 15 8,720 9.228 and other payables 5.432 Other labies 25 14,756 15,702 Labitles directy 3&sociated with assets cassified as held for sale 4 3,371 300 TOTAL CURRENT LIABILITIES 54,795 57,591 TOTAL EQUITY AND LIABILITIES 150,332 158 459 NB: The amounts shown in the tables are expressed in millions of euros. In certain cases, rounding may cause non-material discrepancies in the totals. Notes 7.1 7.2 7.3 Dec 31, 2017 65,029 (36,740) (10.0821 (3,736) (11.077) 1,441 4,835 437 3 8.1 8.2 83 8.5 8 in milions of euros Revenues Purchases Personnel costs Depreciation, amortzation and provisions Other operating expenses Other operating Income CURRENT OPERATING INCOME Share In net income of entities accounted for using the equity method CURRENT OPERATING INCOME AFTER SHARE IN NET INCOME OF ENTITIES ACCOUNTED FOR USING THE EQUITY METHOD Mark-to-maket on commodity contracts other than trading Instruments Impalment losses Restructuring costs Changes in scope of consolidation Other non-recurring Hems INCOMENLOSS) FROM OPERATING ACTIVITIES Financial expenses Financial income NET FINANCIAL INCOME LOSS Income tax benefexpense) NET INCOMENLOSS) RELATING TO CONTINUED OPERATIONS NET INCOMENLOSS) RELATING TO DISCONTINUED OPERATIONS NET INCOMENLOSS) Net Income loss Group Share of which Net Income Toss relating to continued operations, Group Share of which Ner Income loss relating to discontinued operations, Group Share Non-controlling Interests of which Non-controlling Interests relating to continued operations of which Non-controlling Interests relating to discontinued operations BASIC EARNINGS LOSS) PER SHARE EUROS) of which Baskeaningsfoss) relating to contrued operations per share of which Basic eatings/loss relating to discontinued operations per share DILUTED EARNINGSHLOSS) PER SHARE (EUROS) of which Diluted earingsfoss relating to continued operafons pershare of which Diluted earingsfoss relating to discontinued operations per share 5.273 (307) (1,317) (671) 752 1911) 2,819 (2.122) 827 (1.296) 425 1,948 290 2.238 1,423 1,226 190 815 10 11 93 0.53 0.45 0.08 0.53 0.45 0.08 11 ASSETS in milions of euros Notes Dec 31, 2017 Dec. 31, 2016 Non-current assets Goodwi 12 17.285 17,372 Intangible assets.net 13 6.504 6,609 Property, plant and equipment net 14 51.024 57,739 Available for sale securites 15 2,656 2,997 Loans and receivables at amorized cost 15 2.976 2,250 Derivative Instruments 15 2.948 3,500 Investments in entities accounted for using the equity method 3 7,409 6,624 Other assets 25 567 431 Deferred tax assets 10 803 1,250 TOTAL NON-CURRENT ASSETS 92,171 98,905 Current assets Loans and receivables at amorized cost 15 599 595 Dervative Instruments 15 7,378 9,047 Trade and other receivables, net 15 20,311 20,835 Inventories 25 3,656 Other assets 25 8,492 10,692 Financial assets at fair value through Income 15 1,608 1,439 Cash and cash equivalents 15 8,931 9,825 Assets classifed as held for sale 4 6.687 3,506 TOTAL CURRENT ASSETS 58,161 59,595 TOTAL ASSETS 150,332 158,499 NB: The amounts shown in the tables are expressed in millions of euros. In certain cases, rounding may cause non-material discrepancies in the totals. LIABILITIES in milions of ups Notes Dec 31, 2017 Dec 31, 2016 Shareholders eu 36,639 39,578 Non-controlling interests 2 5,938 5,870 TOTAL EQUITY 17 42.577 45,447 Non-current abilities Provisions 18 18.428 19,461 Long-term borrowing 15 25 292 24,411 Derivative Instruments 15 2.980 3,410 Other finandal labres 15 32 200 Other labies 25 1,009 1,203 Deferred tax Illables 10 5.220 6,775 TOTAL NON-CURRENT LIABILITIES 52.950 55,461 Current llables Provisions 18 3,340 2,747 Short-term borrowings 15 8,176 12.539 Denvative Instruments 15 8,720 9.228 and other payables 5.432 Other labies 25 14,756 15,702 Labitles directy 3&sociated with assets cassified as held for sale 4 3,371 300 TOTAL CURRENT LIABILITIES 54,795 57,591 TOTAL EQUITY AND LIABILITIES 150,332 158 459 NB: The amounts shown in the tables are expressed in millions of euros. In certain cases, rounding may cause non-material discrepancies in the totals. Notes 7.1 7.2 7.3 Dec 31, 2017 65,029 (36,740) (10.0821 (3,736) (11.077) 1,441 4,835 437 3 8.1 8.2 83 8.5 8 in milions of euros Revenues Purchases Personnel costs Depreciation, amortzation and provisions Other operating expenses Other operating Income CURRENT OPERATING INCOME Share In net income of entities accounted for using the equity method CURRENT OPERATING INCOME AFTER SHARE IN NET INCOME OF ENTITIES ACCOUNTED FOR USING THE EQUITY METHOD Mark-to-maket on commodity contracts other than trading Instruments Impalment losses Restructuring costs Changes in scope of consolidation Other non-recurring Hems INCOMENLOSS) FROM OPERATING ACTIVITIES Financial expenses Financial income NET FINANCIAL INCOME LOSS Income tax benefexpense) NET INCOMENLOSS) RELATING TO CONTINUED OPERATIONS NET INCOMENLOSS) RELATING TO DISCONTINUED OPERATIONS NET INCOMENLOSS) Net Income loss Group Share of which Net Income Toss relating to continued operations, Group Share of which Ner Income loss relating to discontinued operations, Group Share Non-controlling Interests of which Non-controlling Interests relating to continued operations of which Non-controlling Interests relating to discontinued operations BASIC EARNINGS LOSS) PER SHARE EUROS) of which Baskeaningsfoss) relating to contrued operations per share of which Basic eatings/loss relating to discontinued operations per share DILUTED EARNINGSHLOSS) PER SHARE (EUROS) of which Diluted earingsfoss relating to continued operafons pershare of which Diluted earingsfoss relating to discontinued operations per share 5.273 (307) (1,317) (671) 752 1911) 2,819 (2.122) 827 (1.296) 425 1,948 290 2.238 1,423 1,226 190 815 10 11 93 0.53 0.45 0.08 0.53 0.45 0.08 11