Question

________ refers to the way a company finances itself through some combination of debt and equity sources.

Group of answer choices

Cost of capital

Working capital management

Capital structure

Factors of production

Answer 1

Capital structure refers to the way a company finances itself through some combination of debt and equity sources.

E.g. Capital structure of ABC Ltd. is 60% Equity & 40% Long-term debt.

• Cost of capital: It is the cost of funds of a company. In other words, it is the investors' required rate of return.
• Working capital management: Working capital is current assets minus current liabilities. Working capital management is the management of current assets and current liabilities to ensure short-term liquidity.
• Factors of production: Inputs used to produce output. They are land, labor, capital, and entrepreneurship.