All business organizations whether it's manufacturing, trading or service, must build some necessary facilities to hold the business. These facilities are created by acquiring fixed assets and current assets. The choice as per acquisition of those assets is thought as investment decision. Once the investment decision is created, there arises a necessity for determining the suitable amount of various sources of finance for fulfilling the investment needs. This decision is understood as capital structure decision. The company capital structure decision may be a major area of study in finance. It affects the well beings of the corporate both within the short run as well as long term. The capital structure decision is vital due to the necessity to maximise returns of the firm and since of the impact, such a choice has on the firm’s ability to cater to its competitive environment. Capital structure refers to the combo or proportion of various sources of finance to total capitalization of a firm. It’s the proportion existing between various sources of future capital like equity capital, preference capital and debentures raised in a very firm. A firm should select a financing mix which maximizes its value or minimizes its overall cost of capital. A corporation should plan its capital structure on its incorporation and in its subsequent financing decision should be made for accomplishing the identical. Thus, capital structure decision could be a continuous process and should be made as and when a firm requires additional finances. The importance of capital structure lies within the indisputable fact that different sources of capital have different risk return characteristics. Certain sources of capital are more costly but lesser risky whereas others are lesser costlier but more risky. for example equity is the least risky capital from the company’s point of view. Because it's to not be returned to the shareholders during the life time of the corporate and it doesn't involve fixed commitment regarding payment of dividends but its most expensive source of capital. However, there's no empirical evidence on the connection of capital structure of corporate firms in India with market price of the firms and various factors influencing capital structure decisions. This article attempts to judge the patterns of capital structure in Indian corporate sector emerging from financial liberalization and capital market reforms. The difficulty is to research capital structure practices of Indian corporate.

KEYWORDS: Capital Structure, Retained Earnings, Equity, Debt, Financing, Investment, Corporate.