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zafar

How can I find optimal debt ratio for the company I am analyzing?

  • 3 years ago
  • 3 years ago

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  1. business1
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    i would calculate cost of capital at each debt/capital level from may be 20%, in 10% increments, up to 60%. at whatever level the cost of capital is lowest, that is the optimal debt load.

    • 3 years ago
  2. rai_90
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    If there is no tax advantage for issuing debt, do not issue debt. Some middle eastern nations have zero tax rate.

    • 3 years ago
  3. gloomberg
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    by optimal, u mean from whose perspective? credit agency? equity analyst? internal valuation?

    • 3 years ago
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