What is the main focus of capital structure management?

The main focus of capital structure management is maximizing shareholder value through optimal balancing of debt and equity. This approach aims to find the right mix of financing that minimizes the overall cost of capital while supporting the company's growth and strategic goals. By carefully managing the proportion of debt and equity, a company can enhance its profitability and, consequently, its valuation, leading to increased shareholder wealth.

In contrast, minimizing tax liabilities although important, is just one aspect of financial management and does not encompass the broader goals of capital structure management. Eliminating all forms of debt is typically seen as impractical, as debt can provide leverage and tax advantages. Concentrating on increasing physical assets relates more to asset management rather than capital structure specifically, which focuses on how a company finances its operations and growth through a mix of equity and debt.