Revista de Economía y Negocios

Debt vs. Equity: Analyzing the Optimal Capital Structure for Businesses

Abstract

Chen Wang*

The choice between debt and equity financing is a fundamental decision for businesses, impacting their risk profile, cost of capital, and overall financial health. This paper analyses the optimal capital structure for businesses by examining the advantages and disadvantages of debt and equity financing. Through a comprehensive review of existing literature and empirical data, we identify key factors that influence capital structure decisions and provide insights into how businesses can navigate the complexities of financing to maximize shareholder value and sustain longterm growth.