Financial structure refers to the combination of debt and equity that a company uses to finance its activities. It can also be called the capital structure.
Private and public companies use the same framework to develop their financial structure, but there are a few differences between them.
Financial managers use the weighted average cost of capital as the basis for managing the combination of debt and equity.
Debt to equity and debt to equity are two key ratios that are used to get an idea of a company’s capital structure.