DROP DOWNS

2. The target capital structure Think about managing a firm's capital structure and trying to achieve and maintain its target and/or optimal capital structures. The steps taken to bring about this target and/or optimal structure will have consequences for the firm's performance and characteristics, including its riskiness, profitability, and even its visibility in the financial markets. When discussing the amount of debt financing employed in a firm's optimal capital structure, it is customary to refer to it as the company's Using more debt will the risk borne by stockholders. As a firm's tax rate decreases, it becomes advantageous for the firm to take on additional debt. manager would be more likely to use debt in an effort to boost his firm's profits. debt capacity debt collateral debt characteristic decrease increase more less Using more debt w A conservative An aggressive