A firm’s capital structure can be determined by examining which parts

A firm’s capital structure can be determined by examining which parts of the firm’s balance sheet?

A) The long-term assets
B) The debt and equity
C) The short-term assets and liabilities
D) None of the above because a firm’s capital structure is best observed on the income statement.

ANSWER

Answer: B
Explanation: B) Long-term assets speak to the question of capital budgeting, short-term assets and liabilities speak to net working capital decisions.