An Empirical Study on Capital Structure and Profitability: The Case of Muscat Securities Market

Imran Ahmad Khan

Abstract


This study is aimed to find out the impact of capital structure on the company’s performance. The study uses five performance measures (including return on equity, return on assets, earning per share, market value of equity to book value of equity and Tobin’s Q) as dependent variable and four capital structure measures ( including short term debt, long- term debt and total debt to total assets, and total debt to total equity ) as independent variable. The study is performed by using a sample of 35 listed companies of the Muscat Securities Market over a period of seven years from 2010 to 2017.The results showed that capital structure had a positive impact on the performance measures in both the financial and market ratios, and statistically significant with TDTA except MBVR was significant with TDTA and with SDTA. Finally, the study findings suggest equations to determine the effect of the various debts on the company’s performance.


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ISSN : 2251-1555