Impact of Capital Structure on Profitability and Behaviour of Share Prices

Authors

Sandeep Kumar

Abstract

Funding decisions for a particular company to get profit is a crucial decision will progress in the future. One of the most perplexing issues faced by finance managers is to know about the effect of capital structure on the profitability of company. Many studies have been carried out to examine the effect of capital structure on the profitability of firms, but most of them belong to other parts of the world, and only few studies have been conducted in India. Changes in the capital structure and financial performance are of central importance in assessing the overall returns of companies and, more importantly, in knowing whether stock returns are sensitive to changes in the capital structure. In order to discuss this impact, theoretical background of the different sources which related to the impact of capital structure on share prices; discussed in this paper. In this paper an attempt has been made so as to ascertain the impact of capital structure on the profitability of a company. Based on the various data, it was concluded that the change in capital structure and company performance had an impact on the stock prices.

Keywords

Capital structure, Profitability, Share Prices, Debt-Equity

Impact of Capital Structure on Profitability and Behaviour of Share Prices. Sandeep Kumar. 2022. IJIRCT, Volume 8, Issue 5. Pages 6-10. https://www.ijirct.org/viewPaper.php?paperId=2205002