How is "capital structure" defined?

"Capital structure" refers specifically to the mix of debt and equity financing that a company uses to fund its operations and growth. This concept is critical in finance as it reflects how a company finances its assets and operations, which can greatly influence its overall risk and return profile.

The choice of capital structure involves determining the optimal proportion of debt—such as loans and bonds—and equity—such as common and preferred stock—used in financing. A well-considered capital structure can lead to lower costs of capital, increased financial flexibility, and a better balance of risk and return for both the company and its investors.

In the context of the other choices, while marketing funds, revenue strategies, and liquidity positions are relevant business considerations, they do not specifically capture the essence of capital structure. Thus, the choice that defines "capital structure" accurately is focused on the financing mix of debt and equity.