Capital structure is also called as capital mix. This post discusses about setting up optimum capital structure (not financial structure).

There is always some confusion regarding the terms capital structure and financial structure. Capital management refers to the total combined investments of a business comprising bonds, long-term loans and the total of the shareholders’ funds. Capitalization strictly speaking has no meaning when the balance sheet of a company contains share capital as the only item. Therefore the word capital structure will be appropriate to be used when the capitalization contains debt also.

So, what is capital structure and what is financial structure? How are they managed? How to set up an optimum capital structure (capital mix)?