Definition of Financial structure

Definition of Financial structure

The financial structure represents the specific combination of long–term financial debt and value that an organization uses to finance its functions.

Brief Explanation of Financial structure

The financial manager must decide how much cash should be obtained and the best combination of financial debt and value to acquire, and he must find the least expensive types of resources for the organization. The structure straight impacts the risk and value of the associated company.

Each company has a different combination based on its needs and costs. As a result, each organization has its own particular debt-equity rate. Like the main city system, the financial structure is split into the quantity of their income that goes to lenders and the quantity that goes to investors. In connection with this, the main city system can be seen as a part of the financial system that is more designed for long-term research while the financial system provides more straight answers regarding their current conditions. It does consist of both long-term and short-term responsibilities in its computation.


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