BUSINESS ADMINISTRATION
FINANCIAL MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Capital cost-minimum
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Total value of company-maximum
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Both (a) and (b)
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Market price of shares minimum
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Detailed explanation-1: -Key Takeaways. An optimal capital structure is the best mix of debt and equity financing that maximizes a company’s market value while minimizing its cost of capital. Minimizing the weighted average cost of capital (WACC) is one way to optimize for the lowest cost mix of financing.
Detailed explanation-2: -Capital Structure is an optimal mix of which one of the following options: Sales and profits.
Detailed explanation-3: -Some main factors include the firm’s cost of capital, nature, size, capital markets condition, debt-to-equity ratio, and ownership.
Detailed explanation-4: -Capital structure refers to the composition of debt and equity. A capital structure is said to be optimum when the proportion of debt and equity is such that it increases the wealth of shareholders.