A mix of a company's long-term debt, specific short-term debt, common equity and preferred equity. The capital structure is how a firm finances its overall operations and growth by using different sources of funds.
there are three structures followed by the companies
1.Maturity matching policy - Current liabilities only can finance by the amount of temporary current assets.
low risk
2. Aggressive policy - Current liabilities can finance by the amount of temporary current assets and permanent current assets. too risky
3. Conservative approach - Current liabilities only can finance by the a part of amount of temporary current assets. it means temporary current assets> current liabilities.
the more safest mode to financing.
- AzR 13 -
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