What role does the financial manager play in capital structuring?

The financial manager plays a crucial role in capital structuring by determining the optimal mix of debt and equity financing for the organization. This decision-making process is essential because it directly affects the company's overall cost of capital, financial risk, and potential returns to shareholders. By evaluating various sources of financing, such as loans, bonds, and equity issuance, the financial manager aims to find a balance that minimizes costs while maximizing financial stability and growth potential.

Selecting the appropriate capital structure is integral to strategic planning, as it influences investment decisions and impacts the company's ability to fund its operations and growth. A well-structured capital mix helps to ensure that the business can mitigate risks during economic fluctuations and capitalize on opportunities for expansion. This role is central to achieving the overall financial objectives of the organization and ensuring long-term sustainability.