(a) Cash flow position of the business: It generally refers to the position of a company in terms of liquid assets and cash inflows and outflows. If a company is in a stronger cash flow situation then the company can easily go for borrowing of funds without any restriction. On the other hand, if the company has scarcity of funds then it would opt for shareholder's fund.
(b) Level of fixed operating cost: Level of fixed operating cost refers to the cost incurred by the company for running the day-to-day operations. In case a company having huge fixed operational costs, such as rent of the building or factory, salaries, etc., would go for owner's fund. This is because high fixed operational cost is associated with the risk of default on payment of interest and in the second case; a company with low operational cost would opt for borrowed funds.
(c) Control consideration: When the company issues more of equities it dilutes the control of management over the operations of the company. On the other hand, debthas no such considerations. So, companies that are worried about the dilution of control can go for high amount of debt and low amount of equity.
(d) State of capital market: During the period of a growing capital market, it is easy to take funds through equity. On the contrary, during depression, it becomes so hard to raise funds through equity. Therefore, in such a situation, it is preferable to raise funds through debt.