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 its financing arrangements, which includes the debt-equity ratio. The other options given relate to the firm's assets or the issuance of equity securities, but do not fully encompass what is meant by capital structure.

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