Capital Structure Terms
Why Capital Structure matters in interviews
These terms are tested to see how well you actually understand the different types of capital and the overall capitalization of a business. Most students only focus on memorizing formulas that include each type of capital. It’s wiser to put yourself into an investor’s shoes and think about the advantages and disadvantages of each.
C
- Common StockCapital StructureCommon Stock is a part of Shareholders’ Equity on the Balance Sheet and reflects the par value of the shares issued by the company.
- Convertible DebtCapital StructureConvertible Debt is a type of financing where a company issues bonds or loans that can be converted to a predefined number of equity shares at a later date or under certain conditions.
- Convertible Preferred StockCapital StructureConvertible Preferred Stock is a type of preferred equity that gives its holders the option to convert their preferred shares into a specified number of common shares.