You are the financial manager of North plc, a listed manufacturing company, which has divisions in a number of countries and is considering expansion through acquiring or working with other companies. This can involve increasing, substantially, the amount of debt in the company.

You have decided to try and enhance the understanding of the Board of Directors of some relevant key areas of financial management.

The areas you have decided to focus upon are:-

1. The importance of a balanced capital structure and the problems which are associated with high levels of gearing.

2. The reasons for corporate restructuring involving mergers and takeovers and evaluate the various methods by which such restructuring may be financed.

You are needed to produce a report to the board of directors which explains and discusses the above areas.

The report should add critical evaluation of the models and concepts proposed outlining their merits and limitations. You may incorporate logical assumptions with regard to the company and should use numerical examples designed by yourself to illustrate the models and concepts that you propose to adopt.