Two internal factors that here would be financial flexibility and management style. Financial flexibility is that aspect of the company that would help it raise the right capital in worse economic times. Not all companies will have better financial flexibility and hence this is a firm level factor which affects the company’s capital structuring. Now if one were to only understand financial flexibility, since they don’t have any problem as such in raising capital at any time, the company could raise capital in good times just so as not to strain their flexibilities later on (Chand, 2017). The company furthermore would seek to maintain a higher financial flexibility by having a lower company debt. For instance, the airline industry works this way.
They would generate better cash flow when the time is good; they also make sure they have lower debts so as to put them always in the position of having better financial flexibility. Next to financial flexibility, the management style would also play a critical role on corporate capital structuring. Management might either be less inclined to use debt in order to raise capital usually. However, a management that is more open to cutting it at the edge might use the situation to raise capitals or profits. The aggressive nature of the management would hence decide how they want to plan for earnings per share.