Debt, Equity, the Optimal Financial Structure, and the Cost of Funds

  • John B. GuerardJr.
  • Anureet Saxena
  • Mustafa Gultekin


Traditionally, the capital structure of a firm has been defined as the book value of its common stock, its preferred stock, and its bonds, or fixed liabilities. These items are considered to be the “permanent” financing of the firm. The special importance given to them, however, may lead to error in financial analysis. Thus, a company which has only common shares in its capital structure is often described as conservatively or safely financed. But if, for example, the firm has considerable trade debt outstanding, owes on a bank loan, or is tied up with long-run rental contracts, it may not be “safely” financed.


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© Springer Nature Switzerland AG 2021

Authors and Affiliations

  • John B. GuerardJr.
    • 1
  • Anureet Saxena
    • 2
  • Mustafa Gultekin
    • 3
  1. 1.McKinley Capital Management, LLCAnchorageUSA
  2. 2.McKinley Capital Management, LLCStamfordUSA
  3. 3.Kenan-Flagler Business SchoolUniversity of North Carolina Chapel HillChapel HillUSA

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