International Journal of Scientific Research and Engineering Development

Financial health, operational efficacy, and value generation in the long run are all heavily influenced by capital structure choices. A company's risk tolerance, cost of capital, and stock price performance are all affected by the financing mix it chooses: debt versus equity. The influence of leverage, cost of capital, profitability, and market circumstances on valuation variables including Tobin's Q, EPS, ROE, and market capitalization is analyzed in this research, which seeks to understand the link between capital structure choices and business value. Examining whether firms with optimized capital structures attain higher firm value than highly leveraged or under-leveraged firms, the study employs secondary financial data in addition to theoretical models like the Modigliani-Miller propositions, trade-off theory, pecking order theory, and agency theory. The research's overarching goal is to help managers and investors make better strategic decisions by illuminating the best debt-to-equity ratio for increasing shareholder value and maintaining a competitive edge.

Mr.Fasi Ur Rehman, Mr.Dinesh,"Capital Structure Decisions and Their Impact on Firm Value in Today’s Dynamic Market" International Journal of Scientific Research and Engineering Development, V9(2): Page(1591-1601) Mar-Apr 2026. ISSN: 2581-7175. www.ijsred.com. Published by Scientific and Academic Research Publishing.