The amount of permanent short-term debt, long-term debt, preferred stock, and common stock used to finance a firm defines the firm's ____.
A) financial structure
B) capital structure
C) target capital structure
D) optimal financial structure

Question

Quizplus · Accepted Answer

Capital structure is the composition of a company's funding sources, which may include debt, equity, and hybrid securities. It is important for a company to maintain an appropriate capital structure to balance risk and return and maximize shareholder value. The other answer choices (financial structure, target capital structure, and optimal financial structure) are related to capital structure but do not fully encompass its definition.

The Amount of Permanent Short-Term Debt, Long-Term Debt, Preferred Stock