Capital Structure

Tax Glossary Definition

Capital Structure

Capital Structure – Capital structure refers to the way a company finances its long-term operations and expansion by balancing different sources of funds, primarily debt and equity. It determines the organization’s financial leverage and influences its overall cost of capital, risk exposure, and potential returns to shareholders. Example: If a company has ₹1 crore in equity and ₹50 lakh in long-term debt, its debt-to-equity ratio is 0.5, indicating a moderate level of leverage.

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