What is financial Structure? | What do you mean by Financial Structure?
The term financial structure is different from capital structure. Financial structure shows the pattern total financing. It measures the exact to which total funds are available to finance the total assets of capital.
Financial structure = Total Liabilities
Financial structure = Capital structure+ Current Liabilities
Nature of financial structure:
It includes both long term and short term sources of fund.
It means the entire liabilities side of the balance sheet
Financial structure consists of all sources of capital
It will be not more important while determining the value of the firm
Nature of Capital Structure:
It includes only long term sources of funds
It means only the long term liabilities of the company.
It consists of equity, preference and retained earning capital.
It is the major determinations of value of the firm.
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