What is the financial structure?
The financial structure is simply a means to describe the total range of assets and types of financing, which are used as part of the total financial activity of the company or other entity. Within this structure, information concerning short -term loans, long -term debt and any kind of capital owns is included in the overall management strategy. The structure is sometimes referred to as the "right side" because the financing monitored as part of the structure is usually recorded on the right side of the balance sheet maintained by society.
Sometimes there is a confusion between the financial structure and the capital structure of the company. The key difference is that the financial structure is more inclusive in that it requires monitoring short -term obligations and long -term. On the other hand, the capital structure focuses on accounting of its own capital and long -term debt obligations, which means obligations that will last more than the calendar year. The capital structure does not include attention to the short -termDebt or loans, nor any obligations for which they are expected to be settled in full up to 12 months or less.
Assessment of the financial structure of business is a key strategy in determining whether the company is financially stable. Since this approach includes a wider range of financial assets, it is easier to manage the task of determining whether the company is increasing or reducing the total value. Regular time to check structure, such as monthly or quarterly, offers the advantage of identifying new trends that could be an advantage or task of operation, and adjusting the asset management strategy to achieve the desired outcome.
It is important to realize that the financial structure and viable and profitable companies are moving from time to time. It means that a negative change from one review period to another does not necessarily mean that there is a reason for concern. By identifying reasons of change can maThe Jittel and Managers to find out whether isolated events that are unlikely to represent themselves have a short -term influence that is now approved or whether there is a problem that should be solved to avoid any long -term complications for business operations. In some cases, the continuing control of the financial structure may also inspire creative ideas about how to make improvements that eventually help to increase society's solvency and increase the chances that the company has been in operation for many years to come.