Capital Structure - Definition & Meaning Explanation
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- Definition of Medium Term Financing
- Definition of Medium Term Financing
- Explanation of Medium Term Financing
Some random terms...
Modal structure: The meaning of structure is the formation or composition of elements. Every company or company has a structure in capital formation.
So, the capital structure means the total capital of an enterprise or business. The capital structure consists of debt obligations, long-term loans, preferred capital, equity capital, various types of reserves and cash balances.
Thus, the capital structure is the overall combination of all the invested amounts that work for the business in order to keep the company running smoothly.
Some characteristics of the capital structure:
There are several characteristics of the capital structure which are described below…
1. Profitability (the ability to generate profit) must be taken into account when determining the capital structure.
2. If the ability to pay debts is achieved through the current activities of companies that benefit from capital gains, then we can say that the capital structure is good.
3. The capital structure of the company must be adequate in case of liquidity.
4. The capital structure must be flexible in order to adapt to changing conditions in the long term.
5. Equity and debt capital should be in close position to form an optimal capital structure. In such a situation, the capital structure should be conservative.
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