If a company has significant cash on its balance sheet, investors are most likely to...

When a company holds significant cash, investors generallyprefer a balanced capital structure—meaning a mix ofequity and debt—becausesome debtcanimprove the company’s return on equityandenhance capital efficiency. A company with significant cash and no debt may be seen as underutilizing capital, which could be more productively allocated to growth initiatives or returning value to shareholders.