What reason might a company have for significantly changing its capital structure?

One reason a company might decide to drastically alter its capital structure is for many reasons. A company could decide to change its capital structure for a variety of reasons. Higher leverage can result in higher returns, but it also comes with more risk. This factor must be considered when considering changes.

Another consideration is increasing your liquidity, to help cover unexpected expenses and take on additional projects. Additionally ,changes in capital structure may help a company maintain an optimal level of debt & equity investments which can result in better cash flow management and improved financial stability . Companies can also change the ratio of equity and debt financing to be more flexible in launching new products or entering new markets. They have more sources for funding if they need it.

Ultimately, deciding to alter one’s capital structure is not a decision that should be taken lightly as it involves numerous risks and costs. However, by carefully considering all factors involved ,companies can take advantage of strategic opportunities which will improve their overall performance & long-term prospects for success.