ABSTRACT:- Indonesia has one of the most competitive and fastest growing consumer goods markets in the world. Even though the consumer goods industry is less resource intensive than the other manufacturing industries, they still need tremendous expertise and large costs for the distribution and branding of goods. As the consumer goods industries continue to grow, the companies may seek to use external financing, such as equity or debt, to maximizes the firm’s value which will influence the capital structure. When managers prioritize to maximizes the firm’s value, it is expected that there is an optimal target capital structure they want to achieve. Managers may or may not adjusted the capital structure toward the target. The speed of adjustment can be caused by the managers actively or passively adjusting the capital structure. This study will explore the existence of optimal capital structure and whether the managers actively adjust toward the target.

KEYWORDS:- Active Adjustment, Capital Structure, Consumer Goods Industry, Partial Adjustment, Speed of Adjustment.