Capital Structure
Capital structure refers to the mix of debt and equity financing that a company uses to fund its operations and growth. It represents how a firm finances its overall operations and investments through different sources of funds, including long-term debt, preferred stock, and common equity. The choice of capital structure affects a company's risk profile, cost of capital, and valuation.
Developers should understand capital structure when working in fintech, financial software, or enterprise systems that involve corporate finance, investment analysis, or risk management. It's crucial for building tools that model company valuations, assess financial health, or automate investment decisions, as it directly impacts metrics like weighted average cost of capital (WACC) and leverage ratios.