CAPITAL STRUCTURE AND ITS IMPACT ON FIRMS PERFORMANCE: AN EMPIRICAL INVESTIGATION ON OIL AND GAS SECTOR IN PSE

Abstract

The present work attempts to single out the relation of capital structure with firm’s performance. The firm’s performance is restrained by Net Profit, Return on Assets (ROA) and Return on Equity (ROE). Whereas, capital structure dimensions are Debt to Equity ratio (DER) and Debt to Assets Ratio (DAR). The Capital structure is fundamental because it affects the firm’s overall operations. The secondary data has been collected by using complete sector of oil and gas as a sample. The statistical techniques such as descriptive statistics and regression are applied for data analysis by using STATA. Return on Assets (ROA), Return on Equity (ROE) and net profit are treated as independent variables while Debt to Assets Ratio (DAR) and Debt to Equity ratio (DER) are dependent variables. The result show that there is a relationship, but the nature of relationship is mixed. The current study will help the company’s management to sketch the optimal capital structure to maximize shareholder’s wealth.