The capital structure is made up of debt and equity used to fund the company. Capital structure is one of the key topics in finance among academics. The organization's capacity to carry out the needs of its stakeholders is closely connected to the capital structure. In financial terms, the capital structure means how a company funds its assets through a combination of debt, equity or hybrid securities (Saad, 2010). The organization’s capital structure is very difficult to assess. Financial managers face difficulties in deciding the optimum capital structure precisely. The optimum structure of capital means optimizing the profitability of the enterprise with a minimum weighted average cost of capital and to run a business effectively, a company uses different forms of financing. The Funds System (CS) is actually associated with different forms of funding used by a company to access assets that are necessary for both its processes and growth. The system for funds primarily involves long-term financial debt, preferred shares and real value interest. If you take just how much of any form of financing a company keeps as a portion of its funding, it can be quantified. The system for funds varies from the monetary framework because it encompasses short-term financial debt, payable corporate accounts, and other debts. Most corporations strengthen their accounts by leverage or even financial debt.
- Quote paper
- Aaima Khalid (Author), 2021, Impact of Capital Structure on Banking Performance. Case Study of Pakistan, Munich, GRIN Verlag, https://www.grin.com/document/1589648
