General Studies · Capital Structure and Financial Structure
Which of the following statements correctly identifies the distinction between capital structure and financial structure as defined in financial management?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Financial structure includes the complete financing mix consisting of both long-term and short-term sources, while capital structure is limited to long-term funds only.✓
- 2Capital structure includes all current liabilities and spontaneous sources of finance, while financial structure refers only to permanent ownership capital.
- 3Financial structure represents the make-up of long-term capitalization including loans and bonds, whereas capital structure excludes debt-based resources.
- 4Capital structure is synonymous with the total assets of a firm, while financial structure refers exclusively to the equity portion of the balance sheet.
Correct answer
Financial structure includes the complete financing mix consisting of both long-term and short-term sources, while capital structure is limited to long-term funds only.
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