Which term refers to the mix of debt and equity used to finance a company's operations?

The term that refers to the mix of debt and equity used to finance a company's operations is capital structure. Capital structure represents how a firm finances its overall operations and growth through various sources of funds, primarily distinguishing between debt (borrowed funds) and equity (owner's funds). A well-defined capital structure is crucial because it influences both the risk and return profile of the company.

Understanding capital structure is essential for investors and financial analysts, as it helps evaluate the financial health of a company, its cost of capital, and its ability to generate returns. The optimal capital structure balances the benefits of debt financing, such as tax advantages, against the risks associated with increased leverage.

The other terms, while related to finance, refer to different concepts. Asset allocation pertains to how an investor distributes investments among various asset categories. Financial leverage specifically describes the use of borrowed money to amplify returns, thus being a component of capital structure but not synonymous with it. An investment portfolio is a collection of financial assets owned by an individual or an institution, which does not necessarily imply the manner in which those assets are financed.