Capital structure is very important to every firm because it is how the firm finances its overall operations and growth through different sources of funds. Different types of capital include: long-term debt, specific short-term debt, common equity, and preferred equity (Investopedia). A company's debt-to-equity ratio is what investors refer to when looking at capital structure. It provides insight into how risky a company is. Debt comes in the form of bond issues or long-term notes payable, while equity is classified as common stock, preferred stock or retained earnings. There are many theories about capital structure and its importance to company. I found an article which talks about the most important theories of capital structure, specifying the practical implications, as well as the strengths and weaknesses of these theories"