The firm's capital structure refers to the:
A)mix of current and fixed assets a firm holds.
B)amount of capital invested in the firm.
C)amount of dividends a firm pays.
D)mix of debt and equity used to finance the firm's assets.
E)amount of cash versus receivables the firm holds.

Question

Quizplus · Accepted Answer

The term "capital structure" refers to the mix of debt and equity used to finance a firm's assets. It involves determining what proportion of the firm's assets will be financed by debt (borrowed funds) and what proportion will be financed by equity (owner's funds). The specific mix of debt and equity that a firm chooses will affect its cost of capital, risk level, and overall financial structure. Choices A, B, C, and E do not accurately reflect the concept of capital structure.

The Firm's Capital Structure Refers to The