DIRECTIONS. Analyze the situation and answer the question on a separate sheet of

paper.

One of the VP for Finance of the Financial Manager is to determine the

appropriate capital structure of the company. To illustrate, show$/$draw the figure

below: Sample Capital Structure

Equity

Assets

Liabilities

In the figure above, the total assets are financed by $60\%$ debt and $40\%$ equity.

Accordingly, the capital structure is $60\%$ debt and $40\%$ equity.

Question:

Do you think there is an ideal mix of debt and equity across corporations?

Elaborate your answer.