What does capital structure mean on the CPA exam?
Capital structure. The mix of debt and equity funding the entity uses. It drives leverage, the cost of capital, and how sensitive earnings are to a change in operating profit.
Which CPA exam sections use capital structure?
Capital structure appears in the BAR section of the CPA exam.
Related terms
- weighted average cost of capital: The blended after-tax cost of a company's debt and equity, weighted by how much of each it uses.
- statement of cash flows: The statement that explains the change in cash by sorting it into operating, investing and financing activity.
- treasury stock: A company's own shares reacquired and not retired.
- operating income: Profit from the core business, before interest and tax.
- total assets: Everything the entity controls that is expected to produce future benefit, added up.
- partnership liabilities: Debt of the partnership, allocated among the partners and added to their outside basis.