What is capital composition?

Answer 1

Capital composition refers to the structure of a company's funding sources, detailing the different types of capital it utilizes for financing its operations and growth. This typically includes equity capital (from shareholders), debt capital (from loans and bonds), and retained earnings. Understanding capital composition is crucial for assessing a company's financial health, risk profile, and overall cost of capital. It helps investors evaluate how effectively a company is leveraging its resources to generate returns.