Optimization of Capital Structure by Combined Methods of TOPSIS and Entropy Method

Abstract

The purpose of this paper is to contribute to the methodology of quantified optimization of capital structure. The decision of capital structure is influenced by a variety of factors, including the integrated capital cost, the risk factor and the capital value added rate. After set-up of evaluation indicator model, two methods are applied and the results are consistent with each other. Therefore the suggestion of how to optimize the capital structure is given and the empirical result of the company is also proved.