what measures do analysts and investors use to evaluate capital structure 
in addition to the weighted average cost of capital wacc several metrics can be used to estimate the suitability of a company s capital structure leverage ratios are one group of metrics that are used such as the debt to equity d e ratio or debt ratio the bottom linecapital structure is the specific mix of debt and equity that a company uses to finance its operations and growth debt consists of borrowed money that must be repaid often with interest while equity represents ownership stakes in the company the debt to equity d e ratio is a commonly used measure of a company s capital structure and can provide insight into its level of risk a company with a high proportion of debt in its capital structure may be considered riskier for investors but may also have greater potential for growth 