Impact of capital structure on profitability in India Online publication date: Wed, 28-Apr-2021
by Ainsley Granville Andre Jorge Bernard; Brahma Edwin Barreto; Rodney D'Silva
International Journal of Public Sector Performance Management (IJPSPM), Vol. 7, No. 3, 2021
Abstract: Liberalisation and globalisation of global economic policies have led to the expansion of investment opportunities and financing options. The capital structure decision is vital for organisations due to its long term impact on profitability. The current research is an attempt to establish a hypothesised relationship of the impact of capital structure on business revenue of companies and the interrelationship between capital structure and profitability. Capital structure is represented by debt/equity ratio while return on investment (ROI), return on capital employed (ROCE) and return on equity (ROE) have been considered to be the determinants of profitability. The study concludes that out of the ten companies considered for the study, J.K Cement, KCP and J.K Lakshmi Cement established a positive impact of capital structure on profitability whereas India Cement, Ultra Tech Cement, Ambuja Cement, ACC Cement, Dalmia Bharat, Birla Corp and Prism Cement have revealed a negative impact of capital structure on profitability.
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