Q: What is optimal capital structure?

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'optimal' means: best possible compromise solution to a problem, when there are several competing considerations, not all of which can be simulataneously maximized.

Yes, but only if the solution must be integral. There is a segment of a straight line joining the two optimal solutions. Since the two solutions are in the feasible region part of that line must lie inside the convex simplex. Therefore any solution on the straight line joining the two optimal solutions would also be an optimal solution.

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optimal capital structure means using the resources of capital optimally, at is where they can utilised properly. target capital structure means investment made in the certain project so that they can utilise the resource of capital properly.

optimal capital stucture is that where the firm value is high and the wacc of the firm is low and that capital structure a firm can follow constantly and that capital stucture not become a burdon on firm.

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capital structure is the structure/form/shape/component of total amount of capital owned by a company .... means the total issued or subscribed capital whether its in the form of ordinary shares, PTCs ,TFCs, etc optimal capital structure is the such amount of capital which a company maintains while seeings its cost.

best universal capital structure for all companies?

There is nothing called optimal capital structure. optimal capital structure for a company refers to the composition of debt and equity, where the firm cost of capital is the lowest and value of the firm the highest. Optima capital structure for one company can not be same for the other company as well as the firms differ from each other in their basic characteristics. Even if the firm have same basic characteristics, they differ in Human resource, skill set etc.

target capital structure

capital structure is the structure/form/shape/component of total amount of capital owned by a company .... means the total issued or subscribed capital whether its in the form of ordinary shares, PTCs ,TFCs, etc optimal capital structure is the such amount of capital which a company maintains while seeings its cost.

R. S. Thompson has written: 'Corporate asset market extensions and the optimal capital structure'

Capital structure with a minimum weighted-average cost of capital and thereby maximizes the value of the firm's stock, but it does not maximize earnings per share (Eps). Greater leverage maximizes EPS but also increases risk. Thus, the highest stock price is not reached by maximizing EPS. The optimal capital structure usually involves some debt, but not 100% debt. Ordinarily, some firms cannot identify this optimal point precisely, but they should attempt to find an optimal range for the capital structure. The required rate of return on equity capital (R) can be estimated in various ways, for example, by adding a percentage to the firm's long-term cost of debt.

Basic tools of capital-structure management include debt financing, equity financing, and hybrid financing. Companies must consider factors such as cost of capital, risk tolerance, and financial flexibility when determining the optimal mix of debt and equity in their capital structure. Additionally, financial ratios like debt-to-equity ratio, interest coverage ratio, and return on equity are used to evaluate and manage the capital structure.

Optimal working capital is that point where exact amount of working capital is available to run day to day activities and there is no excess or shortage of working capital at any point.