European Academic Research ISSN 2286-4822
ISSN-L 2286-4822
Impact Factor: 3.4546 (UIF)
DRJI Value : 5.9 (B+)
Article Details :
Article Name :
Impact of Capital Structure on Financial Performance: A case study of Pakistan Textile Industry
Author Name :
Imtiaz Najam, Sajid Ali Khan, Uamara Sheikh
Publisher :
Bridge Center
Article URL :
Abstract :
The capital structures of a firm have a value of backbone and essentials part. Its play a very important role to capture the market while fabricating maximum financial performance which is best interest of the share and stake holders for more investment as well. The textile industry of Pakistan is the largest industry and major segment of manufacturing sector which is very helpful to capture the exporters. But unfortunately the performance of Pakistan textile industry is under the optimum level which is very serious matter. In this quantitative study, 31 registered firms at Karachi Stock Exchange (KSE) of Pakistan were analyzed for the period of four years 2010-2013 to seek the best mixture of capital structure to enhance the firm’s profitability. The panel data was fetched from annual financial reports of the firms’. Wherein, return on assets, return on equity and earnings per share considered as dependent variables. Independent variables are short-term debt, long-term debt, debt to assets ratio, debt to equity ratio and firm size which is consider as control variable. To indentify the cause and effects relationship between the variables, pooled and fixed effects regression models were applied. The analysis concludes that capital structure is significant with financial performance in case of return on equity & earnings per share and insignificant in case of return on assets.
Keywords :
Capital Structure, Short-term Debt (STD), Long-term Debt (LTD), Debt to Assets Ratio (DAR), Debt to Equity Ratio (DER), Firm Size (FSV), Financial Performance, Return on Assets (ROA), Return on Equity (ROE), Earnings per Share (EPS) and Textile Industry of Pakistan.

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