Question

4. Capital structure of a company refers to a. the property, plant, and equipment that the...

4. Capital structure of a company refers to
a. the property, plant, and equipment that the company purchases for long-term projects with capital that is raises
b. the business organization of the company, in particular, the structure of it major divisions
c. the mix of long-term debt and equity that the company uses to finance its projects

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Homework Answers

Answer #1

Capital structure of a company refers to :-

Answer :- ( c ) the mix of long term debt and equity that the company uses to finance its projects .

Explanation :-

Capital structure of a company means the mix of debt and equity needed to finance the business . Capital structure tells us about the proportion of debt and equity in the total amount raised by company .

Explanation for rejection of other points :-

Capital budgeting means the decision regarding investing in property , plant & equipment needed for long term projects . So, option (a) is wrong .

Option ( b ) is also wrong as it does not refer to capital structure in any way .

So, the right option is ( c ).

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