Articles Junction

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Article Junction is an online blog of Sandeep Patil. Here, I share my encounters and experiences of life and would contribute articles on variety of topics; like finance, technology, health, the Internet, mobile, celebrities, etc. I shall also publish review articles on latest movies, documentaries, gadgets, products, services, so on. My attempt is to blog what I have seen, understood and learned.

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Articles published on 'Articles Junction Blog' (AJB) are written and published by Sandeep Patil. This blog is updated and maintained by my co-author and webmaster Manoj Patil. Some articles are also contributed by our guest bloggers on a timely manner. We hope you will enjoy reading our articles. We welcome you to submit your suggestions.

Welcome to Articles Junction Blog, a free information portal on variety of subjects and topics that influenced different aspects of my life.

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What is Capital Structure, Definition of Capital Structure

Define Capital Structure, Meaning of of Capital Structure


Capital Structure relates to the combination of sources from which long term funds are required to raise the business. In other words, it means the composition of the firm's long term funds comprising of equity, preference and long-term loans.

According to Gerstenberg, the definition of capital structure follows: ↓

“Capital Structure of a company refers to make-up of its Capitalization”.

Capital Structure also suggests the ratio between owned capital and borrowed capital. While planning the capital structure, proper balance between debt and equity is essential. There is no hard and fast rule in deciding the composition of capital structure. The company can go only for equity capital or the company may decide a certain ratio between equity and loan capital. It is always advisable to have a certain ratio between owned funds and borrowed funds.


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