Finance glossary
Capital Structure
Definition
The mix of debt and equity a company uses to finance itself.
Capital structure describes how a firm funds its operations and growth through a blend of debt and equity. More debt is cheaper and tax-advantaged but raises financial risk; more equity is safer but dilutive. The optimal mix minimizes the overall cost of capital.
In a sentence
Loading up on cheap debt shifted the firm's capital structure toward more leverage.
Get a word like this every morning
Word of the Day on your Home Screen, with quizzes and flashcards. Get the app →