A capital restructuring is usually required when the organization is unable to meet its obligations in respect of the capoital that it has raised. In case the orgainization has a lot of debt and is unable to meet its interest payments, a restructuring by reducing debt would help the organization in generating funds for its survival. Similarly if an organization has excess funds, it may fo in for a buiy back and reduce the number of shares. In either case, the investors benefit by an increase in share price and the market sees the improvements in the earning capacity of the firm.
The most appropriate capital structure is the one that minimizes the overall cost of capital. Therefore the financial manager should analyze the changes in the costs of the components of the capital structure and choose the one that minimzes the cost