Which objective focuses on the acquisition and maintenance of financing for operations?

• A. Capital Structure
• B. Liquidity
• C. Solvency
• D. Working Capital

Answer: (A)

Acquiring and maintaining financing for ongoing operations is a function of capital structure. This area focuses on the mix of debt and equity a firm uses to fund its assets and activities, how it raises new funds, and how it maintains access to financing at a reasonable cost. Decisions about leverage, debt versus equity, financing sources, and sustaining credit relationships all fall under capital structure, with the goal of supporting operations while managing risk and cost of capital.

Liquidity and working capital relate to short-term cash flow and the management of current assets and liabilities, while solvency concerns long-term ability to meet all obligations. The description given—financing for operations—specifically points to capital structure.