What is Capital Structure?
A definition of Capital Structure
“Capital structure refers to the mix of a company’s long-term sources of funds, including debt, equity, and other financial arrangements used to support its operations and growth.”

Business Glossary > What is Capital Structure?
Examples of Capital Structure in a Sentence:
The capital structure of the company includes a mix of debt and equity.
Investors are often interested in a firm’s capital structure to assess financial stability.
The capital structure decision is crucial for minimizing the cost of capital.
Why is Capital Structure Important in Business?
Understanding capital structure is essential for a company’s financial strategy, as it impacts overall risk, cost of capital, and the potential return on investment. Smart capital structuring can enhance a firm’s value and support growth initiatives.
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Associated Terms
Here are some associated business terms and synonyms for “Capital Structure”:
- Financial Structure
- Debt-Equity Ratio
- Funding Composition
IBM Capital Structure
IBM’s capital structure is composed of a balanced mix of debt and equity, allowing the company flexibility to invest in new technologies while maintaining financial stability. This approach has helped IBM manage risks and leverage opportunities in the tech industry.
Final Notes on Capital Structure
When companies consider their capital structure, they should focus on factors like debt-to-equity ratio, cost of different financing options, and the impact on shareholder value.
Optimizing these elements can enhance corporate financial health and competitive positioning.
This has been a definition of Capital Structure meaning.
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