8. Capital structure
can be a mixture of:
ο± company's long-term debt
ο± short-term debt
ο± common stock
ο± preferred stock
9.
10. Debt is one of the two main
ways a company can raise
money in the capital
markets.
11. Companies benefit
from debt
οΌ Interest payments
οΌ Debt also allows a company or
business to retain ownership, unlike
equity.
οΌ Additionally, in times of low-interest
rates, debt is abundant and easy to
access.
12. ο Equity allows outside investors
to take partial ownership of the
company.
ο Equity is more expensive than
debt, especially when interest
rates are low.
13. A long-term
investment
A long-term investment is an
account on the asset side of a
company's balance sheet that
represents the company's
investments, including stocks,
bonds, real estate, and cash.
Long-term investments are
assets that a company intends
to hold for more than a year.
14. Capital Budgeting
Capital budgeting is the
process that a business uses
to determine which proposed
fixed asset purchases it
should accept, and which
should be declined.