A firm's capital structure consists of which of the following?
A) The amount of debt that a firm utilizes
B) The amount of debt and preferred stock that a firm utilizes
C) The amount of interest-bearing debt, preferred stock, and common stock that a firm utilizes
D) The mix of long and short-term debt used by the firm.

Question

Quizplus · Accepted Answer

A firm's capital structure typically consists of all interest-bearing debt, preferred stock, and common stock that the firm utilizes to finance its operations. This may include a mix of short-term and long-term debt, as well as different types of equity such as common stock or preferred stock. However, capital structure usually does not consider non-interest bearing short-term liabilities such as accounts payable or accrued expenses. Therefore, option A and D are not accurate. Option B only includes preferred stock, which is only one component of a complete capital structure.

A Firm's Capital Structure Consists of Which of the Following