What does capital structure refer to?

Capital structure refers specifically to the mix of a company's long-term debt and equity financing. This concept is crucial in finance as it represents the way a company finances its operations and growth through various sources of funds.

Long-term debt includes loans, bonds, and other borrowings that are expected to be repaid over a period of time exceeding one year. Equity financing consists of funds raised by issuing stocks, which represent ownership in the company. The balance between debt and equity can significantly influence a company's financial risk and return, affecting operational decisions and investor perception.

Understanding capital structure is vital for assessing the financial health of a company, as it affects its cost of capital, risk assessment, and overall value in the eyes of investors and creditors. In contrast, the other options refer to unrelated financial concepts. For instance, the total amount of a company’s assets is a measure of its resources but does not indicate how these resources are financed. Similarly, the valuation of market share and overall revenue are important metrics for assessing business performance but do not define capital structure.