Question

How can I find optimal debt ratio for the company I am analyzing?

Answer 1

i would calculate cost of capital at each debt/capital level from may be 20%, in 10% increments, up to 60%. at whatever level the cost of capital is lowest, that is the optimal debt load.

Answer 2

If there is no tax advantage for issuing debt, do not issue debt. Some middle eastern nations have zero tax rate.

Answer 3

by optimal, u mean from whose perspective? credit agency? equity analyst? internal valuation?