Introduction to Corporate Finance — Secretarial Practice STD 12 Commerce / Arts — Question
Maharashtra BoardEnglish MediumSTD 12 Commerce / ArtsSecretarial PracticeIntroduction to Corporate Finance4 Marks
Question
Capital structure is composed of owned funds and borrowed funds.
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Answer
Capital structure means to mix up of various sources of funds in desired proportions.
To decide capital structures means to decide upon the ratio of different types of capital.
A firm’s capital structure is the relation between the debt and equity securities that make up the firm’s financing of its assets.
The capital structure is composed of own funds which include share capital, free serves, and surplus, and borrowed funds which represent debentures, bank loans, and long-term loans provided by financial institutions.
Thus capital structure = Equity share capital + preference share capital + reserves + debentures.
Thus, it is rightly said that capital structure is composed of owned funds and borrowed funds.
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