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 ?
Dubai: Sharjah-based Dana Gas said on Thursday it regularly evaluates options for optimum capital structure including listing of its shares on alternative exchanges.
UK-based Interserve, a multinational support services and construction company, said it was working with its advisers to deliver the optimum capital structure for the group to help support its long-term, sustainable development.
Interserve said: "The board is working with its advisers to look at all options to deliver the optimum capital structure for the business to support its long-term, sustainable development.
Raising this limit (FDI cap) is about financing and what is the optimum capital structure for Indian insurers.
As an associate at Mirus Capital Advisors, an investment bank in Burlington, Massachusetts, Bernsetein supported several sell-side M&A transactions, evaluated sources of finance and advised clients on optimum capital structure.
Dana Gas continues to assess various options for its optimum capital structure and will update the market when appropriate.
As such, the ability of the company to maintain the earnings and its ability to continue to infuse funds through alternative sources to meet the committed obligations along with factors such as level of support extended towards subsidiaries, successful commissioning of the ongoing projects and achieving optimum capital structure would be the key rating sensitivities.
This will also act as a guide for the financial managers to design their optimum capital structure to maximize the market value of the firm and minimize the agency cost.
But a second line of research--by Kim (1978), Baxter (1967), Lee and Barker (1977), Scott (1977), Barnea, Haugen and Senbet (1981), Chen (1978), Chen and Kim (1979), and many others--has established more formally that unique level of optimum capital structure does indeed exist for a firm if market distortions caused by taxes, bankruptcy costs, agency problem, informational asymmetry, etc.
The learning objectives of the case include: 1) Introducing students to a systematic approach to capital budgeting decisions 2) Examining how firm's cost of capital is calculated and financial theory regarding a firm's optimum capital structure 3) Examining the relationship between a firm's cost of capital, capital budgeting and long-term financial performance 4) Examining capital expenditure evaluation techniques (NPV, IRR and Cash Payback and 5) Exploring non-financial issues that need to be considered when evaluating capital expenditures.
Going forward, successful establishment of the company's own infrastructure, profitably scaling up of operations while maintaining optimum capital structure would be the key rating sensitivities.
maintain optimum capital structure would be the key rating sensitivities.