What is capital structure class 12 business studies

The meaning of Capital structure can be described as the arrangement of capital by using different sources of long term funds which consists of two broad types, equity and debt. The different types of funds that are raised by a firm include preference shares, equity shares, retained earnings, long-term loans etc.

What is capital structure in business studies?

Capital structure refers to the specific mix of debt and equity used to finance a company's assets and operations. From a corporate perspective, equity represents a more expensive, permanent source of capital with greater financial flexibility.

What is capital structure with example?

1 This mix of debts and equities make up the finances used for a business's operations and growth. For example, the capital structure of a company might be 40% long-term debt (bonds), 10% preferred stock, and 50% common stock.

What is capital structure simple?

What is a Simple Capital Structure? A simple capital structure is a capital structure that contains no potentially dilutive securities. In other words, a simple capital structure consists only of common stock, nonconvertible debt, and nonconvertible preferred stock.

What is capital structure formula?

How Is Capital Structure Calculated? You can calculate your company's capital structure by examining your debt-to-equity ratio, which you determine by dividing your liabilities (level of debt) by your total equity.