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DEFINITION OF 'CAPITAL STRUCTURE'DEFINITION OF 'CAPITAL STRUCTURE'A mix of a company's long-term debt, specific short-term debt, common equityA mix of a company's long-term debt, specific short-term debt, common equityand preferred equity. The capital structure is how a firm finances its overalland preferred equity. The capital structure is how a firm finances its overalloperations and growth by using different sources of funds.operations and growth by using different sources of funds.

Debt comes in the form of bond issues or long-term notes payable, while equityDebt comes in the form of bond issues or long-term notes payable, while equityis classified as common stock, preferred stock or retained earnings. Short-termis classified as common stock, preferred stock or retained earnings. Short-termdebt such as working capital requirements is also considered to be part of thedebt such as working capital requirements is also considered to be part of thecapital structure.capital structure.

INVESTOPEDIA EXPLAINS 'CAPITAL STRUCTURE'INVESTOPEDIA EXPLAINS 'CAPITAL STRUCTURE'A company's proportion of short and long-term debt is considered whenA company's proportion of short and long-term debt is considered whenanalyzing capital structure. When people refer to capital structure they are mostanalyzing capital structure. When people refer to capital structure they are mostlikely referring to a firm's debt-to-equity ratio, which provides insight into howlikely referring to a firm's debt-to-equity ratio, which provides insight into howrisky a company is. Usually a company more heavily financed by debt posesrisky a company is. Usually a company more heavily financed by debt posesgreater risk, as this firm is relatively highly levered.greater risk, as this firm is relatively highly levered.

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Levered Free Cash FlowLevered Free Cash FlowThe free cash flow that remains after aThe free cash flow that remains after acompany has paid its ...company has paid its ...

Capital StrikeCapital StrikeA refusal of businesses to invest in aA refusal of businesses to invest in aparticular sector of the ...particular sector of the ...

Equity FinancingEquity FinancingThe act of raising money for companyThe act of raising money for companyactivities by selling common ...activities by selling common ...

Capitalization TableCapitalization TableA spreadsheet or table that showsA spreadsheet or table that showsownership stakes in a company, ...ownership stakes in a company, ...

Optimal Capital StructureOptimal Capital StructureThe best debt-to-equity ratio for a firmThe best debt-to-equity ratio for a firmthat maximizes its value. ...that maximizes its value. ...

Financial StructureFinancial StructureThe specific mixture of longterm debtThe specific mixture of longterm debtand equity that a company ...and equity that a company ...

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Q: Q: Why should a company buy back shares it feels are undervalued instead ofWhy should a company buy back shares it feels are undervalued instead ofredeeming ...redeeming ...

Repurchase and redemption are associated with different classes of stock. CommonRepurchase and redemption are associated with different classes of stock. Commonshares can be bought back by the issuing ... shares can be bought back by the issuing ... Read Full Answer >>Read Full Answer >>

Q: Q: What are the types of share capital?What are the types of share capital?Share capital refers to the funds a company receives from selling ownership shares toShare capital refers to the funds a company receives from selling ownership shares to

the public. A company that issues 1, ... the public. A company that issues 1, ... Read Full Answer >>Read Full Answer >>

Q: Q: What are the main disadvantages of fixed income securities?What are the main disadvantages of fixed income securities?Fixed-income securities attract investors because they provide guaranteed returns in theFixed-income securities attract investors because they provide guaranteed returns in the

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Q: Q: What are the different equity financing options available to companies in theWhat are the different equity financing options available to companies in theUnited ...United ...

Finding and attaining affordable financing is an ongoing challenge for most businessesFinding and attaining affordable financing is an ongoing challenge for most businesseswithin the United States. Debt financing ... within the United States. Debt financing ... Read Full Answer >>Read Full Answer >>

Q: Q: What are the advantages and disadvantages of preference shares?What are the advantages and disadvantages of preference shares?Preference shares carry a number of benefits for both companies and investors. ThePreference shares carry a number of benefits for both companies and investors. The

chief benefit for shareholders is that ... chief benefit for shareholders is that ... Read Full Answer >>Read Full Answer >>

Q: Q: Are closed end investments actively or passively managed?Are closed end investments actively or passively managed?Closed-end funds, or CEFs, are actively managed. A CEF issues a predetermined numberClosed-end funds, or CEFs, are actively managed. A CEF issues a predetermined number

of shares when it is initially organized. ... of shares when it is initially organized. ... Read Full Answer >>Read Full Answer >>

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Capital StructureCapital StructureCapital structure is the combination of the debt and equity aCapital structure is the combination of the debt and equity acompany uses to finance its long-term operations andcompany uses to finance its long-term operations andgrowth.growth.

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Will Corporate Debt Drag Your Stock Down?Will Corporate Debt Drag Your Stock Down?Borrowed funds can mean a leg up for companies or the bootBorrowed funds can mean a leg up for companies or the bootfor investors. Find out how to tell the difference.for investors. Find out how to tell the difference.

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Working Capital WorksWorking Capital WorksA company's efficiency, financial strength and cash-flowA company's efficiency, financial strength and cash-flowhealth show in its management of working capital.health show in its management of working capital.

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Evaluating A Company's Capital StructureEvaluating A Company's Capital StructureLearn to use the composition of debt and equity to evaluateLearn to use the composition of debt and equity to evaluatebalance sheet strength.balance sheet strength.

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The Working Capital PositionThe Working Capital PositionLearn how to correctly analyze a company's liquidity andLearn how to correctly analyze a company's liquidity andbeat the average investor.beat the average investor.

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The Optimal Use Of Financial Leverage In A CorporateThe Optimal Use Of Financial Leverage In A CorporateCapital StructureCapital StructureThe amount of debt and equity that makes up a company'sThe amount of debt and equity that makes up a company'scapital structure has many risk and return implications.capital structure has many risk and return implications.

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Financial Markets: Capital Vs. Money MarketsFinancial Markets: Capital Vs. Money MarketsTwo commonly used components of the financial market areTwo commonly used components of the financial market aremoney markets and capital markets. Find out the similaritiesmoney markets and capital markets. Find out the similaritiesand differences between them.and differences between them.

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