A capital restructuring occurs when a firm:
A) Increases its debt-equity ratio while maintaining a constant debt-to-asset ratio.
B) Changes its debt-equity ratio without changing its total assets.
C) Reduces both its debt and its equity while maintaining a constant debt-equity ratio.
D) Changes its level of debt without changing its total equity.
E) Refinances its debt at a lower rate of interest.

Question

Quizplus · Accepted Answer

Capital restructuring involves changing the mix of debt and equity in a firm's capital structure, which directly affects the debt-equity ratio without necessarily altering the total assets.

A Capital Restructuring Occurs When a Firm