November 2017
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Wall Street Journal – Why Capital Structure Matters

How companies structure their capital matters – and never more so than when credit is tight and financing hard to find. Much of the recent common wisdom on the subject may be just as wrong about the risks associated with this subject as it was about other risks.

Many firms have gotten into trouble by projecting yesterday’s strong growth far into the future. Many of them would be just as mistaken, were they to project today’s poor numbers forward without taking more than one scenario into account. While it is always necessary to base future planning on a prognosis, that prognosis does not have to stand alone. Plans have to be able to account for more than one possible future outcome.

Michael Milken has written a very interesting piece – “Why Capital Structure Matters” – in today’s Wall Street Journal, that looks at some of the recent mistakes made by firms trying to optimize their capital structures without perhaps taking the possibility of stormy weather into account.

http://online.wsj.com/article/SB124027187331937083.html

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