When a firm is operating at its target capital structure point, the debt-equity ratio is equal to 1.

Name: When a firm is operating at its target capital structure point, the debt-equity ratio is equal to 1.
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Quizplus · Accepted Answer

The target capital structure of a firm is unique to that firm and depends on its specific financial strategy, risk tolerance, and business model. A debt-equity ratio of 1 is not a universal target; some firms may target a higher or lower ratio based on their objectives and industry standards.

When a Firm Is Operating at Its Target Capital Structure