Optimal Capital Structure


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Optimal capital structure:

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1. Debt to equity ratio:

2. If a company's debt equals $50,000,000 and its equity totals $100,000,000, then _____.

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About This Quiz & Worksheet

See if you understand optimal capital structure by completing this multiple-choice quiz and worksheet. For instance, the quiz requires you to recall and be able to use the debt to equity formula.

Quiz & Worksheet Goals

You'll be tested on the following:

  • How to describe optimal capital structure
  • A fact about debt to equity ratio
  • The debt to equity formula
  • How to figure out a company's optimal capital structure
  • Why a company's debt ratio is a concern of banks

Skills Practiced

  • Problem solving - use acquired knowledge to calculate debt to equity ratio
  • Interpreting information - verify that you can read information about why banks are concerned about a company's debt to equity ratio and interpret it correctly
  • Information recall - access the knowledge you've gained about optimal capital structure

Additional Learning

Delve further into this topic by reviewing the lesson titled Optimal Capital Structure. Here's the type of information you'll find in this lesson:

  • What a company's current capital structure reveals
  • Raising versus servicing capital
  • An example of a debt-equity schedule