Asked by Divya Patel on Jun 01, 2024
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The term capital structure describes:
A) The mixture of debt and equity a firm uses to finance its operations.
B) The mixture of long-term investments a firm has made.
C) The mix of preferred stock and common stock that makes up the equity account of a firm.
D) The firm's short-term assets and short-term liabilities.
E) The mixture of short-term liabilities a firm uses to finance its short-term assets.
Capital Structure
The mix of different forms of external funds and equity that a company uses to finance its operations and growth.
Debt and Equity
Two of the main ways companies can raise capital; debt involves borrowing money, whereas equity involves selling a stake in the company.
Equity Account
An account that represents the owner's equity or interest in a company, usually comprising investments made by the shareholders and retained earnings.
- Understand the components and importance of a firm's capital structure.
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Learning Objectives
- Understand the components and importance of a firm's capital structure.
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