Financial Structure


DEFINITION of 'Financial Structure'

The specific mixture of long–term debt and equity that a company uses to finance its operations. This financial structure is a mixture that directly affects the risk and value of the business. The main concern for the financial manager of the company is deciding how much money should be borrowed and the best mixture of debt and equity to obtain. The financial manager also has to find the least expensive sources of funds for the company to use.

Also referred to as capital structure.

BREAKING DOWN 'Financial Structure'

Financial structure is divided into the amount of the company's cash flow that goes to creditors and the amount that goes to shareholders. Each business will have a different mixture depending on its needs and expenses. Therefore, each company will have its own particular debt-equity ratio. For example, a company could issue bonds and use the proceeds to buy stock or it could issue stock and use the proceeds to pay its debt.

  1. Debt/Equity Ratio

    Debt/Equity Ratio is debt ratio used to measure a company's financial ...
  2. Capitalization Structure

    The proportion of debt and equity in the capital configuration ...
  3. Optimal Capital Structure

  4. Cost Of Debt

    The effective rate that a company pays on its current debt. This ...
  5. Capital Structure

  6. Debt Financing

Related Articles
  1. Investing Basics

    Will Corporate Debt Drag Your Stock Down?

  2. Investing Basics

    The Importance Of Corporate Transparency

  3. Fundamental Analysis

    Analyze Cash Flow The Easy Way

  4. Retirement

    The Essentials Of Corporate Cash Flow

  5. Markets

    What Is A Cash Flow Statement?

  6. Retirement

    The Best Way To Borrow

  7. Bonds & Fixed Income

    Uncovering Hidden Debt

  8. Options & Futures

    Top 7 Most Common Financial Mistakes

    Choose fortune over disaster by avoiding these money traps.
  9. Investing

    A Look at 6 Leading Female Value Investors

  10. Term

    What Is Financial Performance?

  1. Can working capital be too high?







You May Also Like

Hot Definitions
  1. Zero-Sum Game

  2. Capitalization Rate

  3. Gross Profit

  4. Revenue

  5. Normal Profit

  6. Operating Cost

Trading Center
You are using adblocking software

so you'll never miss a feature!