Question:
What is meant by capital structure?
What is meant by capital structure?
Show Hint
Capital structure = Combination of debt and equity funds used for financing business activities.
Updated On: Oct 6, 2025
Hide Solution
Verified By Collegedunia
Solution and Explanation
Definition: Capital structure refers to the
mix of debt and equity used by a company to finance its overall operations and growth.
Components of Capital Structure:
Equity Capital: Funds raised through ownership shares such as equity shares and retained earnings.
Debt Capital: Borrowed funds like debentures, loans, and bonds.
Preference Capital: Hybrid form of financing with features of both equity and debt.
Importance: - A well-balanced capital structure minimizes the cost of capital. - It provides financial stability and maximizes shareholders’ wealth.
Was this answer helpful?
0
0
Top Questions on Financial Management
- Marvel Ltd. plans to expand its business and needs help in generating capital while ensuring compliance with the securities market regulator.
(i) Identify the securities market regulator referred to above.
(ii) State any one way in which the securities market regulator protects investors.
(iii) Which intermediary of the securities market regulator protects investors.
(iv) Can the securities market regulator permit a commercial bank to give funds to Marvel Ltd.? Justify your answer by giving a reason.
- ICSE Class XII - 2026
- Business Studies
- Financial Management
- Identify the correct statements about Crowdfunding.
(P) Funds are raised from high net-worth individuals.
(Q) Small contributions are raised from a large group of individuals.
(R) Funds are secured through the stock market.
(S) Funds are sourced from Reserve Bank of India.- ICSE Class XII - 2026
- Business Studies
- Financial Management
- Describe any five factors that a business organisation considers while determining its debt-to-equity ratio.
- ICSE Class XII - 2026
- Commerce
- Financial Management
- Mr. Yang wants to invest ₹30 lakhs in his company. His manager advises him to invest 40% in capital that changes its form and the remaining 60% in capital that does not change its form. Identify the types of capital advised by the manager. State any two differences between these types of capital.
- ICSE Class XII - 2026
- Commerce
- Financial Management
- Give an idea of 'Working Capital'.
- WBBSE XII - 2026
- Business Studies
- Financial Management
View More Questions
Questions Asked in UP Board XII exam
- Find the unit vector perpendicular to each of the vectors (\( \vec{a} + \vec{b} \)) and (\( \vec{a} - \vec{b} \)) where \[\vec{a} = \hat{i} + \hat{j} + \hat{k}, \, \vec{b} = \hat{i} + 2\hat{j} + 3\hat{k}.\]
- Show that the function \( f(x) = 7x^2 - 3 \) is an increasing function when \( x>0 \).
- UP Board XII - 2026
- Application of derivatives
- The radius of an air bubble is increasing at the rate of \(\frac{1}{2} \, \text{cm/s}\). At what rate is the volume of the bubble increasing while the radius is 1 cm?
- UP Board XII - 2026
- Application of derivatives
- If three vectors \(\vec{a}\), \(\vec{b}\) and \(\vec{c}\) satisfying the condition \(\vec{a} + \vec{b} + \vec{c} = 0\). If \(|\vec{a}| = 3\), \[|\vec{b}| = 4 \text{ and } |\vec{c}| = 2, \text{ then find the value of } \vec{a} \cdot \vec{b} + \vec{b} \cdot \vec{c} + \vec{c} \cdot \vec{a}.\] 5
- Prove that (4, 4, 2), (3, 5, 2) and (-1, -1, 2) are vertices of a right angle triangle.
View More Questions