Impact of Capital Structure on Firm’s Financial Performance: Steel Industry of India
Keywords:
Financial Leverage, Capital Structure, Corporate Performance, Bombay Stock ExchangeAbstract
This research investigates the correlation between the capital structure, particularly the level of financial leverage, and the financial efficacy of firms operating within the Steel industry and listed on the Bombay Stock Exchange (BSE). Data spanning seven years, from the fiscal year 2015-16 to 2021-22, were analysed for this purpose. Among the 14 firms listed in the sector, complete data were available for 12 firms, which formed the basis of the analysis. The study employs correlation analysis and Ordinary Least Squares (OLS) regression techniques to examine the hypotheses put forward. Findings reveal that the leverage ratio, as indicated by the Debt to Assets ratio, has a notable negative effect on the financial performance of the firms, as measured by Return on Assets, with a confidence level of 95 %.
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