Pie Model of Capital Structure

Pie model of capital structure

A model of the debt-equity ratio of the firms, graphically depicted in slices of a pie that represent the value of the firm in the capital markets.

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Pie Model of Capital Structure

A graphical depiction of a company's capital structure on a pie chart. Capital structure consists of, in brief, the vehicles by which a company raises capital in order to maintain or expand operations. Thus, a pie model of capital structure would show how much capital comes from stock, how much comes from bonds, and how much comes from other vehicles, such as convertible stock or warrants. A pie model provides an easy reference for management and investors.