Capital & Markets
Capital Structure
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What it means
The mix of debt and equity used to finance the business.
Why it matters
Right mix minimizes cost of capital (WACC) and preserves flexibility.
How to calculate — with Cawan's Shoes
WACC = (E/V)·Re + (D/V)·Rd·(1−T). Cawan's: 60% equity at 12%, 40% debt at 6% after tax → 8.4%.
What's at stake if you ignore this
Wrong mix = higher WACC and reduced valuation.