Question

Stadford, Inc. is financed with 40 percent debt and 60 percent equity. This mixture of debt and equity is referred to as the firm's:

A. capital structure.
B. capital budget.
C. asset allocation.
D. working capital.
E. risk structure.

Answer 1

Answer: (A) Capital structure

Explanation:

The capital structure is basically refers to the overall financial operation in an organization for the growth of the company. The combination of the debt and the equity is basically known as capital structure.

The equity is basically refers to the common and the preferred stock and the debt is one of the form of bond issue.

Therefore, the mixture of 40 percent debt and the 60 percent of the equity is refers to capital structure.