The ideal capital structure:

A) Is that combination of debt and equity which results in a debt-equity ratio of 1.0.
B) Is that combination of debt and equity which yields the highest level of sales growth.
C) Is that of an unlevered firm.
D) Produces the lowest weighted average cost of capital.
E) Is generally unobtainable as it exists only in a firm financed solely with debt.

Capital Structure

The mixture of debt and equity financing a company uses to fund its operations and grow.

Debt-equity Ratio

A measure used to assess a company's financial leverage, calculated by dividing its total liabilities by its shareholder equity.

Weighted Average Cost of Capital

The rate that a company is expected to pay on average to all its security holders to finance its assets, weighting the cost of each source of capital (equity, debt, etc.) by its proportion in the capital structure.