Distinguish, differentiate, compare and explain what is the Difference between Financial structure and Capital structure. Comparison and Differences.
Difference between Financial structure and Capital structure
The following points indicate the difference between the financial structure and capital structure.
1. Financial structure includes both long-term and short-term sources of funds. Capital structure includes only the long-term sources of funds.
2. Financial structures means the entire liabilities side of the balance sheet. Capital structure means only the long-term liabilities of the company.
3. Financial structures consist of all sources of capital. Capital structure consist of equity, preference and retained earning capital.
4. Financial structures will not be more important while determining the value of the firm. Capital structure is one of the major determinations of the value of the firm.