What is meant by capital structure?
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SOLUTION :
Capital structure :
Capital structure refers to the composition of debt and equity. It determines the amount of debt and equity in the capital employed. Capital structure of the business affects its profitability and financial risk.
Capital structure can be calculated as debt equity ratio or as the debt out of total capital. Higher use of debt increases the financial risk.
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the particular distribution of debt and equity that makes up the finances of a company.