Firms can alter their capital structure by:

Question

Quizplus · Accepted Answer

Issuing stock to repay debt is one way firms can alter their capital structure. By issuing stock, they are increasing the equity side of their balance sheet and reducing the debt side, which can help to lower their overall debt-to-equity ratio. This can be a positive move for firms that are currently carrying too much debt and want to reduce their financial risk. The other options (not accepting new projects, investing in intangible assets, becoming an LLC) do not directly address the issue of altering a firm's capital structure.

Firms Can Alter Their Capital Structure By