MAKING CAPITAL STRUCTURE DECISIONS
... Debt equity ratios alone are not reliable therefore an analysis of the magnitude and stability of cash flows relative to fix charges is extremely important to determine the appropriate capital structure of a firm Other Methods of Analysis. Comparison of Capital structure ratios. ... (Rating table 10-3 / Page 305) A significant lowering of a security rating usually is a manifestation of fundamental problems that may rise the cost of leverage, therefore we would like to consider the likely effect of a change in capital structure on the company´s security rating.