Introduction The level of investments a business undertakes today determines how far into the future the business goes, and its future worth. Management of business finances is the most important factor and contributor in the determination of how long a business survives. The capital structure of the business and how well the business deals with agency theory problems help in the maximization of business welfare. Given that businesses are driven by the profit-making motive, it is the role of the management to maximize such profits. Financial Management Costs should be the minimum possible – given the desired level of output, while profits should be the maximum possible – given the input mix. However, attaining this would require consideration of further operations of the business. The business may incorporate stock or shareholders, whose welfare should be put among the interests of the business. Shareholders’ wealth must be maximized in line with the profitability of the business. For the business to effectively remain in balance, the two concepts need to be brought together, and their relationship brought into a balance to avoid catastrophic eventualities in the business operations and its entire cycle. Business investments are long-term in nature and therefore such a cycle is a series of years that the business is expected to be in operation. Managing Capital Structure The capital structure of a business refers to the finances available to a particular business at a given point in time, and the way the finances are categorized. Business capital commonly occurs in two forms: debt and equity. Debt refers to the funds the business borrows at a cost, while equity refers to the funds obtained from the shareholders of the business and the capital initially put into the investment. Management of the two is vital to the survival of the business because proper and effective management guarantees maximization of the business’s wealth (Adizes, 2004). Therefore, the following paragraphs evaluate the need to mage capital structure effectively in maximizing the wealth of business organizations. Economic Condition of the Business The debt and equity portfolio of a business are important in determining the economic status of the business. Demand for capital and its supply in the economy affects businesses directly. When the cost of borrowing is high, businesses access to credit at expensive charges. Baeyens and Manigaart (2003) assert that the willingness to go into debt significantly goes down and hence, investment into the business reduces. This results from the fact that it becomes hard for investors to take on investments at high-interest rates in case their investments were to be financed on credit. Therefore, a firm should have strong equity, and finance operations on equity to survive the effects of investment discrepancy. Effective management of the capital structure of the business would ensure that the series of inconsistencies that would result from the high-interest rates are minimized. On the other hand, if interest rates are low, credit access would be relatively cheaper. Investments would shoot up from both new investors and the investments of the business itself. From the above, the economic condition of a business is an important aspect of the operations of