> If nobody wants your equity then you don't have a lot of room to adjust the ratio.
If literally nobody wants your equity, its price would be 0. I assume you are talking about your equity having a low price instead?
You can still take on debt to buy back shares (or pay a dividend) to lower your outstanding equity. Or you can issue shares to pay back debt.
Or you can use retain profits to pay back debt, lower both the absolute amount of equity and debt.
All of these moves are possible when your share price is low.
So was your comment about "high equity" just about leverage? Like, everyone worries about high leverage but no one seems to care about low leverage (which could be an inefficient capital allocation)? It's just an unorthodox way to put it, that phrase
At most they compare debt to GDP. You almost never hear these panic pieces talk about debt vs equity.
Btw, if people are worried about debt, the first thing we should do is put equity financing on the same footing as debt financing.
As it stands, companies largely service their debt with pre-tax money but pay for their cost of equity with post-tax money.
High debt means high leverage. Low debt means low leverage. Whatever you are calling "high equity" is just low debt, because (as you said yourself) they have a direct inverse relationship. Unless I'm missing something here...