Abstract
Aims: The main aim of this research is to identify the impact of capital structure on the financial health of the manufacturing companies in Pakistan.
Methodology: The researcher aimed at evaluating the effect of the company’s capital structure on the firm’s performance. The researcher will also determine a number of variables for this purpose. The researcher took analysed a sample of 50 companies and the data was collected for the most recent 5 years of the financial statements which was from 2016 to 2020. In respect to analysis of the dataset, it is conducted mainly through the software E-views where wide range of statistical techniques are applied for revealing the findings.
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The goal of the management of every organization is to maximize the wealth of its shareholders. The management takes two main steps for this purpose; it either reinvests what it has already earned in the business or pays divide. The main aim of the business id to achieve an optimal capital structure that reduces the cost of capital of the company. The capital structure is the company’s financing options or the mixture of finance it has obtained through either debt or equity or a combination of both (Ardalan, 2017).
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Ardalan, K., 2017. Capital structure theory: Reconsidered. Research in International Business and Finance, 39, pp.696-710.
Ariyani, H.F., Pangestuti, I.R.D. and Raharjo, S.T., 2019. The effect of asset structure, profitability, company size, and company growth on capital structure (the study of manufacturing companies listed on the IDX for the period 2013-2017). Jurnal Bisnis Strategi, 27(2), pp.123-136.
Ashraf, M., Ameen, A. and Shahzadi, K., 2017. The Impact of Capital Structure on Firm’s Profitability: A Case of Cement Industry of Pakistan. International Journal of Business and Social Science, 8(4), pp.140-147.
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