capital structure having proper ratio of equity and debt means..
Answers
Answer:It means that there should be a balance between the amount of debt and equity a company uses to finance its assets.
Explanation:There are only two ways a company can finance itself either using debt or equity both have their disadvantages and advantages.Capital structure is often defined as the mix of equity and debt that results in the lowest WACC weighted average cost of capital for the firm. Companies are divided into different industries e.g the mining industry, banking industry etc .Different industries have different risks hence different mixtures of financing because of the risks in this industries. For example Mining companies have a high risk hence it would be hard for them to uptake debt as a means of financing on the other hand Banks are highly Leveraged because of their business structure of issuing debt among other services hence they prefer debt as opposed to equity.