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Capital Structure And Financial Performance: Case Study From Pakistan Pharmaceutical Sector

Author

Listed:
  • REHAN, Muhammad

    (Institute of Social Sciences, GaziosmanpaÅŸa University, Tokat, Turkey.)

  • KARACA, Suleyman Serdar

    (Department of Business Administration, GaziosmanpaÅŸa University, Tokat, Turkey.)

  • ALVI, Jahanzaib

    (Department of Business Administration, Iqra University, Karachi, Pakistan.)

Abstract

The main purpose of this research is to find out the relationship between capital structure and the firm's financial performance of the listed Pharmaceutical companies in the Pakistan Stock Exchange. A further specific objective is to find out the relation of debt-equity with gross profit, earning per share, and return on capital and return on equity. This research determines that Capital Structure is adversely linked with the profitability, it suggests that a decrease in the profitability of the organizations is due to an increase in debt capital & vice versa, further the results proclaims that capital is not dramatically significant and impacting, hence results in records that debt to equity is nothing to do with ROE, increasing or decrease in debt or equity financing would affect ROE.

Suggested Citation

  • REHAN, Muhammad & KARACA, Suleyman Serdar & ALVI, Jahanzaib, 2020. "Capital Structure And Financial Performance: Case Study From Pakistan Pharmaceutical Sector," Studii Financiare (Financial Studies), Centre of Financial and Monetary Research "Victor Slavescu", vol. 24(3), pages 66-82, September.
    • Handle: RePEc:vls:finstu:v:24:y:2020:i:3:p:66-82
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    References listed on IDEAS

    as
    1. Joshua Abor, 2005. "The effect of capital structure on profitability: an empirical analysis of listed firms in Ghana," Journal of Risk Finance, Emerald Group Publishing, vol. 6(5), pages 438-445, November.
    2. Balasundaram Nimalathasan, 2010. "Working capital management and its impact on profitability:A study listed manufacturing companies in Sri Lanka," Manager Journal, Faculty of Business and Administration, University of Bucharest, vol. 12(1), pages 76-82, December.
    3. Balasundaram Nimalathasan & Assoc. Prof. Valeriu Brabete Ph.D, 2010. "Capital Structure And Its Impact On Profitability: A Study Of Listed Manufacturing Companies In Sri Lanka," Revista Tinerilor Economisti (The Young Economists Journal), University of Craiova, Faculty of Economics and Business Administration, vol. 1(15), pages 7-16, November.
    4. Margaritis, Dimitris & Psillaki, Maria, 2010. "Capital structure, equity ownership and firm performance," Journal of Banking & Finance, Elsevier, vol. 34(3), pages 621-632, March.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. RukhsanaRasheed & Mehwish Shahid & Munaza Mukhtar & Mazhar Nadeem Ishaq, 2022. "Impact of Capital Structure and Liquidity Conditions on the Profitability of Pharmaceutical Sector of Pakistan," iRASD Journal of Management, International Research Alliance for Sustainable Development (iRASD), vol. 4(2), pages 135-142, june.

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    More about this item

    Keywords

    Return on Capital; Return on Equity; Debt to Equity; KSE-100 Index Pages: 66-82;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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