An Analytical Study on the Impact of Capital Structure on Financial Performance in India

Author(s)	Mr. Ranjit Kumar Paswan
Country	India
Abstract	The study carries a comprehensive analysis of capital structure and its influence on the financial performance of selected eleven companies operating across various industries within the capital goods sector. Secondary data were obtained from the Capitaline database, comprising a ten-year period from 2011 to 2020. Financial performance was assessed using two key parameters: Return on Capital Employed (ROCE) and Net Profit Ratio (NPR). To assess the impact of capital structure, the study considered Debt-Equity Ratio (DER), Debt Ratio (DR), and Interest Coverage Ratio (ICR) as explanatory variables. Methodologically, the research employed panel data analysis, supported by descriptive statistics and correlation analysis. The findings reveal that the Debt-Equity Ratio emerges as the most significant determinant in the ROCE model, representing a negative relationship with ROCE. In contrast, none of the capital structure variables were found to significantly explain variations in NPR.
Keywords	Capital Structure, Performance, Panel Data Analysis
Field	Business Administration
Published In	Volume 5, Issue 1, January-February 2023
Published On	2023-01-06

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International Journal For Multidisciplinary Research