A firm raised all its capital via equity rather than debt. Such a firm is also referred to as a un-levered firm. There are two types of company which differs by its capital structure: Levered company and un-levered company. A levered company has debt and equity in their capital structure, while a un-levered company has no debt in their capital structure composition.
Capital structure is a company's composition of funding to operate their business or to invest them for gaining profit. Choosing debt or equity or both for the capital structure of a company is a vital decision because each of that option generates a cost called the cost of capital.
The cost of capital for equity called dividend, meanwhile the cost of capital of debt called interest. Finance managers must be precise and considerable for making the capital structure decision. They must measure which choice is more profitable considering the amount and the tenor of the cost. This tenor means at what amount of time the company must pay the cost of capital. This term only applies to debt only.