An optimal capital structure is achieved

Question

Quizplus · Accepted Answer

An optimal capital structure is achieved when a firm's expected share price is maximized. This means that the firm has found the right balance between debt and equity financing that will maximize shareholder value. It is important to note that maximizing EPS or profits alone may not lead to the optimal capital structure as it does not take into account the cost of capital or risk associated with each financing option. Achieving the break-even point is important, but it is not related to the capital structure.

An Optimal Capital Structure Is Achieved