Asked by Justin Berry on Jun 16, 2024
Verified
Capital structure measures a company's ability to earn net income from sales.
Capital Structure
The mix of a company's long-term debt, specific short-term debt, common equity, and preferred equity, which is used to finance its overall operations and growth.
- Grasp the concepts of capital structure and how financing decisions impact company risk.
Verified Answer
EK
Emily KimbroughJun 19, 2024
Final Answer :
False
Explanation :
Capital structure refers to the way a company finances its operations through a combination of debt and equity. It does not directly measure a company's ability to earn net income from sales, although it can impact profitability through factors such as interest expense and the cost of capital.
Learning Objectives
- Grasp the concepts of capital structure and how financing decisions impact company risk.
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