Which one of the following refers to the composition of long-term funds such as debentures, long-term borrowing, preference shares, and equity shares in the capitalization of a company?

Correct option is D

Capital structure refers to the way a company finances its operations and growth through different sources of long-term funds, such as debentures, long-term borrowings, preference shares, and equity shares.
· Cost of capital refers to the cost incurred by a company to obtain funds, including interest on debt and dividends on equity.
· Capital budgeting involves planning for long-term investments, including evaluating the potential returns and costs of investments.
· Working capital refers to the difference between a company’s current assets and current liabilities, used to manage short-term operations.
Information Booster
1. Capital structure includes the mix of debt and equity used to finance a company.
2. A good capital structure balances risk and return, ensuring the company is adequately financed for growth while managing financial risks.
3. The cost of capital is a key consideration when evaluating capital structure since it impacts the company's profitability.