1. INTRODUCTION Capital structure refers to the composition of Debt and Equity in a Capital of a Company. The proportion of Debt in a total Capital has a major impact on firm’s operating profits, Net Earnings available towards Equity share holders, Owners fund, financial short term solvency and ultimately on Financial Long term Solvency of a firm. This is because the commitment of fixed charge financial source in a Capital Structure has implication on owners Fund and on Owners liability. The change in a mix of Debt Equity in a Capital Structure has 360 degree impact on a firm ranging from Investors, Individual Savers, Other corporate Savings, Money Lenders, Banks, and Financial Institutions and Majorly on Market Value of Firm. Whenever a discussion on Capital Structure emerges, the Debt Source becomes a major issue to be discussed. The gaining momentum by Debt as a source of Finance is because of its huge Demand and restricted supply of a in a Market and majorly on the Fluctuating Interest rates from time to time and varying from Market to Market on these category of Fund. Though the REAL INEREST RATE of interest may be same for different markets, but the two important factors creating the deviation to the NOMINAL INTEREST RATES are INFLATION and RISK PREMINUM.