Most times companies finances when times are good, capital can be raised by issuing either stocks or bonds. However, when times are bad, suppliers of capital typically prefer a secured position, which, in turn, puts more emphasis on the use of debt capital. With this in mind, management tends to structure the capital makeup of the company in a manner that will provide flexibility in raising future capital in an ever-changing market environment. the management of a company should take into account the business risk of the company, the company's tax position, the financial flexibility of the company's capital structure, and the company's degree of managerial aggressiveness when determining the optimal capital structure The debt-to-equity (D/E) ratio is used to evaluate a company's financial leverage and is calculated by dividing a company's total liabilities by its shareholder equity. The D/E ratio is an important metric in corporate finance. It is a measure of the degree to which a company is financing its operations with debt rather than its own resources. The debt-to-equity ratio is a particular type of gearing ratio