Financial engineering to enhance shareholder value
Financial strategies can have a significant impact on the capital structure of any company as it helps dictate how much debt or equity is used to fund operations. For instance if executives want to maintain a higher level of liquidity then they may choose to rely more heavily on debt financing as these types of instruments typically offer quicker access to capital when needed. Alternatively, if profit-maximizing returns are the primary goal then relying more heavily on equity investments could be beneficial since this type of funding usually requires less interest payments which could lead to greater profits down the line.
Overall choosing the right financial strategy for a business is essential for ensuring it remains viable over time. This decision should take into account both short and long-term goals since different approaches will yield different results depending upon various market conditions. As such companies must always remain mindful about both their current positions and where they hope to be in five years or so when developing strategies related to their capital structures so that appropriate decisions can be made towards achieving desired outcomes.