Impact of Debt Structure on Profitability in Textile Industry of Pakistan
Wali ur Rehman, Goher Fatima, Dr. Mehboob Ahmad, Impact Of Debt Structure On Profitability In Textile Industry Of Pakistan. Int. J. Eco. Res., 2012, v3i2, 61-70
10 Pages Posted: 13 Feb 2017
Date Written: 2012
Abstract
This study aims to analyze the impact of capital structure (i.e. short-term, long-term and total debts) on the profitability of companies in textile industry of Pakistan, while controlling the size of the company. A total of 17 companies (initially 7 and then another 10) were selected randomly for the study. Regression analysis was conducted on six different regression models. The results show that there is a significant and positive impact of short term debts on the profitability of the firm, however long-term debt has no impact on the profitability. It is shown that short-term debts are useful for companies having small sales and vise versa. This study has potential for replication in other industries like cement, petroleum and pharmaceutical.
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