Master Note of Accounting and Finance

Introduction   Capital is the money that is required for business day-to-day operation and future growth. There are mainly four types of shareholder's capital includes common stock, preferred stocks, debt capital (bonds and debentures) and retained earnings.  The capital structure is the mixture of owned capital and borrowed capital. The owned capital includes equity, reserves and surplus while borrowed capital includes debentures or bond and loan. It is also known as the mixture of equity and debt capital. It can be expressed as: Capital Structure = Total Equity + Total Debts Where,  Total Equity = Internal Equity or Common Stock +Preference Stock+External Equity or Retained Earnings (Reserves and Surplus) Total Debts = Long-term Debts + Short-Term Debts   Note 1: Financial structure is the representation of total debts. It can be expressed as: Financial Structure = Total Debts Note 2: Long-term debts are those debts that can be paid after one years such as bond, de