The article explores different models of how companies decide on their mix of debt and equity financing. By creating these models, researchers aim to make it easier to understand and compare different theories on the best capital structure. They also focus on valuing a company's financial claims accurately in each model. Some studies overlook the importance of a company's debt capacity, which is the maximum amount of debt a company can handle. If a company reaches its debt capacity before finding the optimal capital structure, it may not be able to achieve the best financial setup. This highlights the crucial role of debt capacity in determining a company's financial decisions.