The target capital structure is the desired optimal mix of debt and equity financing that firms attempt to achieve and maintain.

Question

Quizplus · Accepted Answer

The statement is true. The target capital structure is the ideal combination of debt and equity financing that helps a company achieve its financial goals, such as maximizing shareholder wealth or reducing the cost of capital. It is a crucial aspect of financial management as it affects a company's risk profile, profitability, and ability to raise funds.

The Target Capital Structure Is the Desired Optimal Mix of Debt