capital structure

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Capital structure

The makeup of the liabilities and stockholders' equity side of the balance sheet, especially the ratio of debt to equity and the mixture of short and long maturities.

Capital Structure

How a company finances its operations. The three most basic ways to finance are through debt, equity (or the issue of stock), and, for a small business, personal savings. Capital structure usually refers to how much of each type of financing a company holds as a percentage of all its financing. Generally speaking, a company with a high level of debt compared to equity is thought to carry higher risk, though some analysts do not believe that capital structure matters to risk or profitability.

capital structure

capital structure

the composition of a JOINT-STOCK COMPANY'S long-term capital which reflects the source of that capital, for example SHARE CAPITAL and long-term LOAN CAPITAL. See CAPITAL GEARING.

capital structure

See capital stack.
References in periodicals archive ?
In addition to identifying an optimal capital structure to help minimise working capital needs and preserve liquidity, a relationship with your suppliers, bankers and customers can bridge any funding deficits and help streamline your payments.
The company added that it is working hard to restore normal good corporate governance in Turkcell and with shareholder representation on the board, so that it can achieve an optimal capital structure in Turkcell.
In other words, how would an optimal capital structure be identified and how can it be known?
MUHAMMAD AZAM KHAN: The basic goal of every organization is to set optimal capital structure that increase the firms value in terms of performance, increasing the share price and having the minimum cost of capital that we have to pay to our borrowers from which we gave our debt and return back that should gave to our equity holders.
and if Vy is equal to zero at the optimal capital structure, then the following equation yields the sensitivity of bankruptcy probability to level of debt payments :
Ross (1977) developed signalling theory which is based on the concept of asymmetric information and its impact in determining the optimal capital structure.
However, these empirical studies failed to assign a definitive value as far as optimal capital structure is concerned (Gitman and Zutter, 2010).
Most discussions in the finance literature about capital structure decisions center on the notion of optimal capital structure or target capital structure.
Many empirical and theoretical studies have explored different factors based on cross sectional time series data to seek the firms' optimal capital structure.
Our operations across the GCC region have been instrumental in driving bottom-line growth, while our commitment to achieving an optimal capital structure has increased earnings per share by 19 per cent," Waleed Al Mokarrab Al Muhairi, chairman of Tabreed, said.
While these studies examine the determinants of the optimal capital structure, the theoretical impact of capital structure on wealth transfer from debtholders to stockholders, the impact of capital structure on stock prices, and the agency costs related to capital structure, they don't address the research question in this paper.
This would allow issuers to select the optimal capital structure based on current market conditions and investor preferences rather than a "one-size-fits-all" approach.

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