Stadford,Inc.is financed with 40 percent debt and 60 percent equity.This mixture of debt and equity is referred to as the firm's:
A)capital structure.
B)capital budget.
C)asset allocation.
D)working capital.
E)risk structure.

Question

Quizplus · Accepted Answer

Capital structure refers to the combination of debt and equity financing used by a company to fund its operations and investments. In this case, the company is financed with 40 percent debt and 60 percent equity, which constitutes its capital structure. The other answer choices (capital budget, asset allocation, working capital, risk structure) do not accurately describe the financing mix of the company.