In the preceding section we discussed the various aspects that make up economic distress; in doing so, we expressly left out the company's financing structure. We will now analyze the capital structure in two dimensions: the first one is concerned with the debt to equity ratio; the second one has to do with the degree of concentration in equity capital.
This analysis will not focus on the problems that may potentially come up in direct connection with such structure. The analysis will focus on the various factors that determine the company's funding and the potential problems that might arise in connection with different levels of debt or degrees of concentration in stock ownership.