The second major decision of the firm is the financing decision, Here, the financial manager is concerned with determining the best financing mix or capital structure of his firm. The financial manager must assess the financial requirements for fixed assets, current assets and intangible assets, fixed working, capital variable working capital and intangible assets. Sources can be categorized into long term and short term or internal and external. Thirdly, financial manager of a company has to determine best capital mix. A company can change its valuation simply by varying its capital structure, an optimal capital structure financing would exist where market price per share is maximized. The financing decision should take into account the firm’s present and expected future portfolio of assets. for they determine the business risk complexion of the firm as perceived by investors. In turn, perceived business risk affects explicit costs of the various methods of the financing. The central issue before him is to determine the proportion of ownership and creditorship securities in capital structure. Use of creditorship securities effects the expected return an financial return an financial risk. The return on equity increase with debt capital and also financial risk. The return on equity increase with debt capital and also financial risk. Again financial risk. The return on equity increase with debt capital and also financial risk. Again financial risk and return and examine the various methods by which a firm goes to the market for raising the long term funds that comprises its capital financing. features, concepts and problems associated with alternative methods of financing.