Capital structure determines how much debt the firm should have in relation to its level of equity.

Capital Structure

Capital Structure is the mix of debt and equity financing a company uses to fund its operations and growth.

Debt

An amount of money borrowed by one party from another, under the condition that it is to be repaid at a later date, usually with interest.

Equity

The owner's interest in an asset or business, representing the residual value after liabilities are deducted from assets.