International Journal of Management and Economics

International Journal of Management and Economics


International Journal of Management and Economics
International Journal of Management and Economics
2021, Vol. 3, Issue 1
Impact of capital structure on profitability: Evidence from various sectors in the nifty 100 index

Eireen Bharucha, Nisha Prasad, Omkar Pawar, Pratik Jaju, Prithika Kharwar, Vidhi Goradia

This study examines the capital structure management of various sectors and various companies from India during the 10 years study period from year 2010 to 2020. One of the most perplexing issues faced by finance managers is to know about the effect of capital structure on the profitability of firm. We investigate the various relationships possible between capital structure and profitability between various sectors, and different companies within that particular sector. Thus, the present study has been undertaken to evaluate the effect of capital structure on the profitability of Nifty 100 companies listed on the National Stock Exchange of India from 2010-2020. Parameters such as financial and operating leverage have been analysed across sectors and companies and other factors affecting profitability like sales growth, firm size, current ratio, GDP growth rate have also been taken into consideration as control variables. The data has been analyzed by using descriptive statistics and multiple panel data regression models. Four different regression models have been used to study the relationship between capital structure and profitability. In these models, we study the individual effect of Degree of Financial Leverage and Degree of Operating Leverage on profitability, that is, ROA and NPR.
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