capital structure

noun

Definition of capital structure 

: the makeup of the capitalization of a business in terms of the amounts and kinds of equity and debt securities : the equity and debt securities of a business together with its surplus and reserves

Love words?

You must — there are over 200,000 words in our free online dictionary, but you are looking for one that’s only in the Merriam-Webster Unabridged Dictionary.

Start your free trial today and get unlimited access to America's largest dictionary, with:

  • More than 250,000 words that aren't in our free dictionary
  • Expanded definitions, etymologies, and usage notes
  • Advanced search features
  • Ad free!

Learn More about capital structure

Share capital structure

Statistics for capital structure

Look-up Popularity

Keep scrolling for more

More Definitions for capital structure

capital structure

noun

Financial Definition of capital structure

What It Is

Capital structure refers to the blend of debt and equity a company uses to fund and finance its operations.

How It Works

If Company XYZ has completed an initial public offering and a bond offering, we could therefore say that Company XYZ's capital structure includes debt and equity. Bank loans, preferred stock, retained earnings and working capital might also be part of the company's capital structure.

In many cases, discussions of capital structure include references to debt-to-equity ratios, which are one of several ratios that measure the relative weight of different types of capital.

Why It Matters

Different types of capital impose different types of risks on a company. For this reason, capital structure affects the value of a company, and therefore much analysis goes into determining what a company's optimal capital structure is. The Modigliani and Miller propositions (created by financial theorists Franco Modigliani and Merton Miller) address this question.

Source: Investing Answers

Comments on capital structure

What made you want to look up capital structure? Please tell us where you read or heard it (including the quote, if possible).

WORD OF THE DAY

by word of mouth

Get Word of the Day daily email!

Test Your Vocabulary

Name that Food Quiz

How Strong Is Your Vocabulary?

Test your vocabulary with our 10-question quiz!

TAKE THE QUIZ
Dictionary Devil

Test Your Knowledge - and learn some interesting things along the way.

TAKE THE QUIZ

Love words? Need even more definitions?

Subscribe to America's largest dictionary and get thousands more definitions and advanced search—ad free!