1) How has Diageo managed its capital structure To date Diageo�s capital structure has been more of a generic result of acquisitions, disposals, and taking advantage of market movements to raise money, issue special dividends or issue shares. Prior to the creation of Diageo, both Guinness and Grand Met had used reasonably little debt to finance themselves and this was reflected in their respective AA and A ratings. The financial mix of the enlarged company continued to be based on what �felt right� policy and what would maintain their debt rating. They kept in mind several variables when deciding on the capital structure of the firm after the merge, such as maintain the interest cover ration at between 5 to 8 times, and as a secondary target, they sought to keep EBITDA/Total Debt at ~ 30 � 35%. Within these boundaries the capital structure tended to be a generic result of acquisitions and disposals, and was manipulated at either end of the range either by the issue of special dividends, or by borrowing through bond or equity issues and the use of ......

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