Capital Structure

Definition:

The distribution of a company’s capital between equity (including, but not limited to, shares in issue, retained earnings and share premium reserves) and debt (referred to as the company’s Gearing or leverage). A simple Capital Structure can often be expressed as a ratio (long-term or short-term) of debt to equity if hybrid securities have not become part of the composition. For example, a company may have a debt-to-equity ratio of 3:1, meaning that for every US$1 of equity in the company there exists US$3 of debt.

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