how do analysts and investors use capital structure 
a company with too much debt can be seen as a credit risk too much equity however could mean the company is underutilizing its growth opportunities or paying too much for its cost of capital as equity tends to be more costly than debt unfortunately there is no magic ratio of debt to equity to use as guidance to achieve real world optimal capital structure what defines a healthy blend of debt and equity varies depending on the industry the company operates in its stage of development and can vary over time due to external changes in interest rates and regulatory environment 