Optimization of capital structure and financial decision-making of small and medium enterprises

Optimization of capital structure refers to how to maintain the best capital structure when an enterprise is making a decision in financing and its key point lies in the reasonable location of the debt ratio. At present, small and medium enterprises generally have higher debt ratio with the characteristics of complexity and limitation in financing. Therefore, enterprises should take into consideration the optimization of capital structure of small and medium enterprises together with the comprehensive factors, such as the profitability of the enterprise, capital cost, developing speed, the nation's tax policy, the attitude of financial institutions and etc., and decide the "elastic limit" of the best capital structure of the enterprises, so as to adjust the capital structure at any time within the limit according to the actual change of the situation.