Capital Structure
Short definition
Capital structure is the mix of debt and equity that funds the operations. WACC weights, the tax shield and distress costs come from this mix; book leverage is not a proxy for the target structure.
Detailed explanation
Market-value weights enter WACC. The net-debt definition (leases, cash, derivatives) moves both leverage and the EV bridge. The target may differ from today’s structure; policy walks toward that target.
In some Turkish periods Kd approaches or exceeds Ke. Then “more debt cuts WACC” fails; flexibility and the maturity wall come first.
Why it matters for the CFO
Dividends, buybacks, acquisition financing and the covenant package all hang on the same mix. Structure is not a hunt for cheap funding; it must fit debt capacity and cash-flow volatility.
How to read it
A 40% D/(D+E) target with book leverage at 25% means WACC is not built on today’s weights. There is no universal optimal leverage; sector cash-flow stability, collateral and lender policy set it.
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What to learn next
Definitions are educational. They are not investment, credit or tax advice.