What reason might a company have for significantly changing its capital structure?

A company may decide to significantly change its capital structure for a variety of reasons. One potential reason is to increase or decrease the amount of leverage within the firm. A higher leverage ratio can lead to greater returns on investments, however it also carries more risk; thus, this factor should be taken into account when making changes.

Other considerations include increasing access to liquidity in order to cover costs associated with unexpected expenses or taking on new projects. Additionally ,changes in capital structure may help a company maintain an optimal level of debt & equity investments which can result in better cash flow management and improved financial stability . Furthermore ,altering the mix of debt/equity financing can give companies more flexibility when approaching new markets or launching innovative products as they have more options to draw from if necessary .

Ultimately, deciding to alter one’s capital structure is not a decision that should be taken lightly as it involves numerous risks and costs. However, by carefully considering all factors involved ,companies can take advantage of strategic opportunities which will improve their overall performance & long-term prospects for success.