Capital structure determines a firm's financial health and is composed of long-term sources of financing like debt and equity. An optimal capital structure minimizes costs and maximizes profits for stakeholders. Financial executives establish capital structure by diversifying debts and equity. Capital structure includes long-term debt, equity capital from common stock, paid-in capital, and retained earnings. Financial structure also considers short-term debt and preferred stock on the liabilities side of the balance sheet. Break-even analysis examines the sales level where total revenue equals total costs, including operating, cash, and financial break-even points. Operating and financial leverage measure the impact of sales changes on operating profit and EPS respectively. Combined leverage considers both effects. A firm's