Capital structure is a firm’s mix of debt and equity. To a traditional businessman, this area was unlikely to create any significant value compared to other areas of finance. In recent years, the situation has changed. This chapter provides some recent examples of capital structure management including Google and McDonald’s, discusses why capital structure has become an important area for start-up and small companies, and why capital structure is a “hot” area in finance. It shows why the perfect market concept fails to explain many important capital structure phenomena including industrial differences in capital structures, underpricing of newly issuing shares, long-term underperformance of firms issuing equity and limited access to credit by small companies. The chapter also provides a review of some basic terminology related to capital structure analysis.