The capital structure of a firm refers to the firm's:
A) Ratio of fixed assets to total assets.
B) Mix of long-term assets including such things as office buildings, manufacturing facilities, and equipment.
C) Financing arrangements as evidenced by the firm's debt-equity ratio.
D) Ability to generate sales by utilizing the fixed assets of the firm.
E) Issuance of equity securities in the firm.

Question

Quizplus · Accepted Answer

The capital structure of a firm refers to how a firm finances its overall operations and growth by using different sources of funds, which is best represented by the firm's debt-equity ratio. This ratio indicates the relative proportions of debt and equity used to finance the firm's assets.

The Capital Structure of a Firm Refers to the Firm's