The capital structure that maximizes the value of a company also minimizes the cost of capital.
In corporate finance, capital structure refers to the combination of various forms of external funds, called capital, used to finance a business. It consists of equity, debt and preferred stock and is reflected on the company's balance sheet.
Capital structure refers to the specific combination of liabilities and equity used to finance a company's assets and operations. Equities represent a more expensive, more financially flexible, permanent source of capital from a corporate perspective. It can be described as placement. type, equity and debt. Various types of funds raised by companies include preferred stock, equity, retained earnings, long-term loans, etc.
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