Target capital structure
Target capital structure is the relative amount of debt, preferred stock, and common equity that the firm desires. The weighted average cost of capital should be based on these target weights.
Definitions
According to Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition),
- Target capital structure. The relative amount of debt, preferred stock, and common equity that the firm desires. The weighted average cost of capital should be based on these target weights.
According to Fundamentals of Financial Management by Eugene F. Brigham and Joel F. Houston (15th edition),
- Target capital structure. The mix of debt, preferred stock, and common equity the firm plans to raise to fund its future projects.
Related concepts
- Financial management. A combination of enterprise efforts undertaken in order to procure and utilize monetary resources of the enterprise.
