Capital Structure Optimization Simulation

• Analyzing financial statements and capital costs

• Evaluating leverage scenarios under varying business forecasts

• Choosing between issuing debt, equity, or hybrid instruments

• Assessing the impact of capital changes on WACC, credit rating, and shareholder value

• Communicating funding decisions to boards, analysts, and investors

• Managing capital structure during growth phases, crises, or M&A events

• Adjusting strategy based on simulated stakeholder feedback and market dynamics

By the end of the simulation, participants will:

• Understand the core principles of capital structure theory

• Apply capital mix decisions to real-world financial challenges

• Evaluate how financing choices affect risk, cost of capital, and valuation

• Respond to shifts in macroeconomic conditions, credit markets, and investor sentiment

• Build persuasive narratives to justify financing strategies

• Work cross-functionally to balance capital access with operational needs

• Apply stress-testing and scenario planning to financial strategy

1. Scenario Introduction Participants receive a business case with financials, goals, and constraints.

2. Capital Assessment They evaluate existing capital structure, debt maturities, and liquidity.

3. Decision Making Participants make funding choices (e.g., refinance debt, issue new equity, or adjust mix).

4. Market and Stakeholder Feedback Their decisions affect stock price, credit score, investor sentiment, and financial ratios.

5. Board-Level Communication Participants justify their capital strategy through memos or presentations.

6. Next-Round Adaptation Each new cycle introduces a new economic context, requiring recalibration.

• Is this suitable for students and professionals? Yes. It’s adaptable for MBA, undergrad, or corporate training contexts.

• Does the simulation include credit ratings? Yes. Creditworthiness and market conditions influence interest rates and financing access.

• Do participants use WACC? Yes. They calculate and optimize WACC to guide financing decisions.

• Is it based on real industry cases? Scenarios are fictional but modeled after real market conditions and sectors.

• How long is the simulation? It can be delivered in a 2 - 3 hour duration or stretched over multiple sessions.

• Can it be used in valuation or corporate strategy courses? Absolutely. Capital structure decisions are central to valuation and long-term planning.

• Does it simulate financial crises or economic downturns? Yes. Participants face shocks like recession, rating downgrades, or liquidity crunches.

• Can it be run in teams? Yes. Teams can take on roles like CFO, treasurer, or investor relations lead.

• Are stakeholder communications included? Yes. Participants justify decisions via board memos, presentations, or press releases.

• How is performance assessed? Based on WACC optimization, valuation impact, financial stability, and quality of rationale.

• Financial soundness and realism of capital decisions

• Strategic consistency over multiple simulation rounds

• Responsiveness to market signals and economic shifts

• Clarity and persuasiveness in written or verbal communication

• Collaboration, if run in team format

• Understanding of how capital mix impacts valuation and risk

Deliverables can include investment memos, capital structure reports, or final board presentations.