ABSTRACT
This chapter expounds and tests a theory of the financial structure of the new SBE. Its approach is evolutionary in that it focusses on how, in theory and practice, the key variables which characterise the small firm’s financial structure evolve over several time periods after inception. The variables emphasised are sales, profits, debt, equity, interest rates and gearing (i.e. debt÷equity). Each of these variables is considered to be functionally dependent on time, and therefore is discussed in terms of a time path or trajectory.
