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joyline yegon
Apr 2

Explain the meaning of capital structure?

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Apr 2
Capital structure refers to the way a company finances its operations and growth through a combination of equity (such as stocks) and debt (such as loans or bonds). It represents the mix of different sources of funds that a company uses to finance its overall operations and investments.

The capital structure of a company is important because it can impact the company's financial stability, risk profile, and cost of capital. A company's capital structure can also affect its ability to attract investors and creditors, as well as its overall financial performance.

By analyzing a company's capital structure, investors and analysts can gain insights into how the company is funded, its financial health, and its ability to generate returns for shareholders. Companies may adjust their capital structure over time in response to changing market conditions, business needs, and financial goals.

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