Assuming GetGo has a rating constraint of maintaining its current credit rating of AAA, does the optimal capital structure conflict with the objective? If it does, what is the effect of such a rating...

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OPTIMAL CAPITAL STRUCTURE CONFLICT WITH CREDIT RATING
Optimal capital structure is a myth in today’s scenario as most firm academically chase it but unable to achieve in reality. Optimal capital structure is optimal mix of debt and equity source of financing that seeks to maximize a company’s market value simultaneously minimizing cost of capital. In simple word it implies finding right combination of debt and equity to finance the projects of company.
We have to understand the about the Credit rating and rating constraints affecting the optimal capital structure of the firms. It is superficial to imagine that the goal of achieving the optimal capital structure not interfering with the objective of maintaining the credit rating AAA of the company. It is so because the credit rating is function of the following variables:
Capital structure – measured as TDA (Total-Debt-to Total Assets ratio) = TD/TA
                D/E Ratio = Total Debt/ Total Equity
                Interest Coverage Ratio = EBIT/Total Interest payout
Firm’s intrinsic factors – Control variable such as:
    Liquidity Factor = Current Assets Ratio = CA/CL
            = Current Assets/Total Assets Ratio
            = Return on Assets ratio = EAT/ Total Assets
Establishing the Capital mix is pivotal theme of any Finance managers Hobson choices. Debt financing is preferred mode of financing as it offers lowest cost of capital due to tax shield benefits. However the recent spate of financial crisis like Subprime housing crisis, Enron fiasco and Covid-19 pandemic keep reinforcing the principle of good financing by deleveraging and eliminating liquidity risk exposure.
While economy is recovering and importance of credit rating can hardly be understated. Credit rating agencies have approach to all information about the firm like business plans, Capex, and dividend policy of firm. These agencies also aid in narrowing the information gap in stock markets .It is usually believed that downgraded firms are more probably like to end up having a average debt ratio owed to low credit rating. Major CFOs and Fund managers of publicly listed and closely held companies interested in raising finances or considering the financing decision hold the credit rating in high esteem and particularly it applies to debt based financing options. Hence the relationship between the credit ratings and Optimal Capital mix decision.
Now just the presence of credit rating facilitates or opens door to numerous financing channels and high rating are passports to instant funding access to many financial instrument at favourable terms for firms. In other good credit rating automatically reduces the cost of external financing. Just as a retail investor always look at the rating assigned by the agencies to a company before providing finance to it to secure his investment , same way the company...