Capital structure management is the best way of financing a firm, or put another way, the right proportion of loans and equity or ownership. The optimal level of debt comes with a cost and risk. It poses undue risks to a business if profits fall, because then huge interest payments have to be paid out. Too much equity means giving up a higher percentage of ownership and control.
It should bring in enough cost minimization along with not taking too much risk. Such balance would make the business grow out of financial instability without revealing its fragility. more