Which of the following is a component of capital structure?

Retained earnings are a component of capital structure because they represent the portion of a company's profits that has been reinvested in the business rather than distributed to shareholders as dividends. This reinvestment contributes to the company's equity base and is a significant source of financing for long-term investments.

In capital structure, the focus is typically on the mix of debt and equity that a company uses to finance its operations and growth. Retained earnings are classified as equity because they arise from the company's net income and contribute to the shareholders' equity section of the balance sheet. This is essential for understanding how a company finances its assets and sustains its operations over time.

Other options like accounts payable, inventory, and current liabilities do not represent sources of long-term capital but rather indicate short-term obligations or current assets, which do not directly contribute to the capital structure in the same way that retained earnings do.