Which concept is described by "capital structure"?

Capital structure refers to the way a company finances its overall operations and growth through the use of different sources of funds. This blend typically consists of debt (such as loans and bonds) and equity (such as stock). The capital structure directly influences a company's financial stability, risk profile, and overall cost of capital.

Understanding capital structure is essential for investors and management as it impacts important financial metrics such as return on equity and earnings per share. A balanced capital structure can help a company reduce its cost of capital while maximizing its growth potential, making it a central focus in corporate finance.

The other options are distinct financial concepts. Total revenue encompasses all income before expenses, profit margins deal with the efficiency of generating profits relative to sales, and geographical diversification relates to spreading investments across various regions to mitigate risk. None of these accurately reflect the specific mixture of debt and equity financing that defines capital structure.