What is the purpose of analyzing capital structure?

Question

Quizplus · Accepted Answer

The purpose of analyzing capital structure is to determine the appropriate mix of equity and debt that a firm should use to finance its operations. This analysis is important because the capital structure can have a significant impact on the firm's cost of capital, profitability, and risk. By determining the optimal capital structure, a firm can balance the benefits and costs of using debt and equity financing.

What Is the Purpose of Analyzing Capital Structure