Corporate Financing Decision

Optimal capital structure refers to the mix of debt and equity financing that maximizes a company’s overall value while minimizing its cost of capital.

Cost of capital refers to the return required to make a capital project worthwhile, representing the cost of funds through debt or equity.

Financial distress is a condition where a company struggles to meet its debt obligations, potentially leading to insolvency or bankruptcy if unresolved.

Debt and equity represent two primary sources of capital through which a company can finance its operations and growth.

Corporate financing decision is the choice of using debt, equity, or internal funds to finance a company’s operations and investments.