Analysis of Capital Structure: Approaches and Challenges

Analysis of capital structure is one of the key aspects in financial management. Analysis is a set of methods designed to develop an optimal capital structure in which the ratio of borrowed and personal funds secures the best proportion of profitability and financial sustainability. As a result, it contributes to an increased market value of a given company. This paper explores quantitative and qualitative approaches for the creation of an optimal capital structure. Each approach is explained in detail with all cons and pros . The author also describes how the approach works in practice.