The term capital structure is a compound of tow words capital and structure. The word capital is viewed from different angles. According to economist capital refers to those assets which are used in the production of goods and services. To the firm the capital is represented by the stock of assets. To the society, capital is restricted to those assets which produce goods and services Accountants use the term capital in the sense of proprietary equity. In fact there are two approaches of capital viz. (i) the fund approach and (ii) the assets approach. The fund approach means that the capital of a concern uses the total funds that have been employed for its running. It recognized the separate entity of a company and considers capital from liabilities side of the balance sheet. The assets approach implies that capital invested in fixed assets and current assets from the capital of a concern. The term structure is used in the science of engineering. “It connotes the arrangement of various part of a building. In case of construction of a building and other construction. There are some standard proportions in which various elements are integrated together.” Hence capital structure relates to the proportion of various sources of funds used to finance the company’s capital requirements.