Capital structure refers to the
A)determination of the ideal mix of current versus long-term assets.
B)methods by which fixed assets are used to produce a tangible product.
C)mix of current assets and current liabilities.
D)acquisition or disposition of a building or other long-term asset.
E)decisions related to long-term debt and equity financing.

Question

Quizplus · Accepted Answer

Capital structure refers to the decisions related to long-term debt and equity financing. It involves determining the ideal mix of debt and equity financing for a company to maximize shareholder value while minimizing the cost of capital. The capital structure of a company affects its financial risk, as debt financing increases the financial risk of a company while equity financing reduces it. Therefore, it is crucial for companies to carefully consider their capital structure decisions to attain their financial goals.

Capital Structure Refers to the