Corporate Capital Structure and Pension Planning
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Capital Structure
Capital structure refers to how a company finances its operations and investments using different combinations of debt and equity. This structure significantly impacts the company's financial strength and profitability.
Simply put, a company can finance itself through debt (loans, bonds, etc.) or equity (stocks). The choice between these two types of financing determines the capital structure.
Debt involves borrowing money that must be repaid with interest. This can increase financial risk if the debt cannot be repaid, but it can also offer tax benefits due to the deductibility of interest.
Equity, on the other hand, involves financing the company by issuing and selling shares. This does not require interest payments, but it dilutes... Continue reading "Corporate Capital Structure and Pension Planning" »