[Verse 1]
When companies borrow, they walk a tightrope thin
Tax shields look tempting, but danger creeps within
Too much debt can poison what seemed like easy gains
Bankruptcy courts waiting when cash flow hits the chains
[Chorus]
Trade-off theory weighs the scale
Tax benefits versus failure's trail
Sweet deductions on the left side
Distress costs where fortunes died
Balance debt before you fall
Trade-off theory explains it all
[Verse 2]
Direct costs bite hard when lawyers circle round
Filing fees and court costs, millions by the pound
Indirect costs whisper, customers flee in fear
Suppliers demand cash, credit lines disappear
[Chorus]
Trade-off theory weighs the scale
Tax benefits versus failure's trail
Sweet deductions on the left side
Distress costs where fortunes died
Balance debt before you fall
Trade-off theory explains it all
[Verse 3]
Financial distress creeps in before the final bell
Assets sold for pennies, reputation starts to swell
Employees jump ship early, talent walks away
Management wastes time fighting fires every day
[Bridge]
Optimal capital structure lives between extremes
Neither zero debt nor maximum schemes
Find the sweet spot where tax savings peak
Before distress costs make your future bleak
[Chorus]
Trade-off theory weighs the scale
Tax benefits versus failure's trail
Sweet deductions on the left side
Distress costs where fortunes died
Balance debt before you fall
Trade-off theory explains it all
[Outro]
Every dollar borrowed needs a careful thought
Some debts bring riches, others leave you caught
The trade-off teaches wisdom's careful art
Balance sheets and futures, play the smartest part