<P> Capital gearing ratio = (Capital Bearing Risk): (Capital not bearing risk) </P> <Ul> <Li> Capital bearing risk includes debentures (risk is to pay interest) and preference capital (risk to pay dividend at fixed rate). </Li> <Li> Capital not bearing risk includes equity shares capital . </Li> </Ul> <Li> Capital bearing risk includes debentures (risk is to pay interest) and preference capital (risk to pay dividend at fixed rate). </Li> <Li> Capital not bearing risk includes equity shares capital . </Li>

Define optimal capital structure and its link with the cost of capital