Practicing Success

Target Exam

CUET

Subject

Business Studies

Chapter

Financial Management

Question:
Capital structure of an enterprise shows which of the following?
Options:
Debtor-creditor ratio.
Fixed assets-current assets ratio.
Interest coverage ratio.
Debt-equity ratio.
Correct Answer:
Debt-equity ratio.
Explanation:
Capital structure refers to the mix between owners and borrowed funds. These are referred as equity and debt . It can be calculated as debt-equity ratio i.e Debt/Equity or as the proportion of debt out of the total capital i.e.,Debt / (Debt+Equity)