A Study on Capital Structure and Profitabilit...

A Study on Capital Structure and Profitability with Special Reference to Engineering Industry in India

Author Name : Dr. A. W. Unas, V. Chandramohan

ABSTRACT

Optimal capital structure is a crucial decision making in the field of financial management of an organisation. The goal of financial management to maximise the profit and wealth is affected by the correct mix of debt and equity.This paper studies the relationship of capital structure and profitability of Indian engineering companies. Gross profit ratio, Net profit ratio, Return on capital employed, Return on net worth and Return on assets are taken as variables. Linear regression and Correlation are used for analysis. The study shows a negative correlation between the two variables under study.

Key Words: Capital structure, Profitability, Debt equity ratio, Regression, ROC