Jasz
VIP Contributor
The capital structure of an enterprise is the makeup of its debt and equity. The debt is the amount that must be paid back to creditors, in order for the company to make its payrolls and other obligations. The equity is how much shareholders have invested in the company.
The capital structure of a company is important because it defines how much debt a company can take on, and how much equity a company has. If a company has too much debt, then it may not be able to pay back its debts when they come due. In this case, creditors can ask for payment in full or partial payment until the time comes when they will be repaid. If a company has too little equity in its balance sheet, then it may have trouble raising money from investors who want to invest their money into growing businesses with solid growth potentials.
The capital structure of a company is important because it defines how much debt a company can take on, and how much equity a company has. If a company has too much debt, then it may not be able to pay back its debts when they come due. In this case, creditors can ask for payment in full or partial payment until the time comes when they will be repaid. If a company has too little equity in its balance sheet, then it may have trouble raising money from investors who want to invest their money into growing businesses with solid growth potentials.
