What is the aim of capital structure optimization?

The aim of capital structure optimization is to locate the best mix of debt and equity financing, which is fundamental for a company’s financial health. This involves determining how to balance these two sources of capital in a way that minimizes the overall cost of capital while maximizing the company's value.

A well-optimized capital structure enables a company to take advantage of the benefits of debt, such as tax deductions on interest payments, while not over-leveraging itself to the point where it can’t meet financial obligations. The optimal mix can enhance the company's financial stability, improve funding conditions, and ultimately lead to a higher stock price.

Other choices do not directly address capital structure optimization. While maximizing short-term profits is important, it does not consider long-term implications of finance sources. Minimizing employee turnover and enhancing marketing strategies relate more to operational and strategic management rather than financial structuring and capital optimization.