Capital structure
Principles of Finance glossary · Cost of Capital & Capital Structure
Definition
The mix of debt, equity, and hybrid securities used to finance a firm's operations.
Capital structure in plain English
When a company needs money to run and grow, it can borrow it ("debt" — loans it must pay back with interest) or sell ownership pieces of itself ("equity" — shares of stock). Capital structure just means the recipe: how much of each the company uses. It's like buying a house — part with a mortgage (debt) and part with your own savings (equity); the split you choose changes how risky your finances are and who has a claim on what. Some companies also use "hybrids" that act a bit like both.
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