Capital Structure
A mix of a company's long-term debt, specific short-term debt, common equity and preferred equity. The capital structure is how a firm finances its overall operations and growth by using different sources of funds.
Debt comes in the form of bond issues or long-term notes payable, while equity is classified as common stock, preferred stock or retained earnings. Short-term debt such as working capital requirements is also considered to be part of the capital structure. Investopedia Says:
A company's proportion of short and long-term debt is considered when analyzing capital structure. When people refer to capital structure they are most likely referring to a firm's debt-to-equity ratio, which provides insight into how risky a company is. Usually a company more heavily financed by debt poses greater risk, as this firm is relatively highly levered. Related Terms:
Cost Of Debt
Cost Of Equity
Debt Financing
Debt/Equity Ratio
Dividend Recapitalization
Equity Financing
Long-Term Debt
Retained Earnings
Shareholders' Equity
Undercapitalization |