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Author: Mohamed Tailab
Publisher:
ISBN:
Category :
Languages : en
Pages : 8
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Book Description
This paper empirically aims to analyze the effect of capital structure on financial performance.Two main sets of variables were used: For profitability, return on assets (ROA) as the ratio of net income to total assets, and return on equity (ROE) as the ratio of net income to total shareholders' equity were adopted as a proxy for financial performance; and to indicate capital structure, short-term debt, long-term debt, total debt, debt to equity ratio, and firm's size were used. A sample of 30 Energy American firms for a period of nine years from 2005 - 2013 was considered. Secondary data were collected from financial statements which were taken from Mergent online. The data were analyzed by using Smart PLS (Partial Least Square) version 3. Multiple regressions indicated that 10% of ROE and 34% of ROA were predicted by the independent variables. Findings also presented that the total debt has a significant negative impact on ROE and ROA, while size in terms of sales has significantly negative effect only on ROE of the American firms. However, a short debt significantly has a positive influence on ROE. An insignificant either negative or positive relationship was observed between long term debt, debt to equity and size in terms of total assets and profitability. A generalization of the results is limited because of the small sample size. For future research, the author suggests addressing a longer period of time with a large sample size of firms. It would be more accurate if future studies included more independent variables such as taxation and concentration.
Author: Mohamed Tailab
Publisher:
ISBN:
Category :
Languages : en
Pages : 8
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Book Description
This paper empirically aims to analyze the effect of capital structure on financial performance.Two main sets of variables were used: For profitability, return on assets (ROA) as the ratio of net income to total assets, and return on equity (ROE) as the ratio of net income to total shareholders' equity were adopted as a proxy for financial performance; and to indicate capital structure, short-term debt, long-term debt, total debt, debt to equity ratio, and firm's size were used. A sample of 30 Energy American firms for a period of nine years from 2005 - 2013 was considered. Secondary data were collected from financial statements which were taken from Mergent online. The data were analyzed by using Smart PLS (Partial Least Square) version 3. Multiple regressions indicated that 10% of ROE and 34% of ROA were predicted by the independent variables. Findings also presented that the total debt has a significant negative impact on ROE and ROA, while size in terms of sales has significantly negative effect only on ROE of the American firms. However, a short debt significantly has a positive influence on ROE. An insignificant either negative or positive relationship was observed between long term debt, debt to equity and size in terms of total assets and profitability. A generalization of the results is limited because of the small sample size. For future research, the author suggests addressing a longer period of time with a large sample size of firms. It would be more accurate if future studies included more independent variables such as taxation and concentration.
Author: Owen Ncube
Publisher:
ISBN:
Category : Capital
Languages : en
Pages : 74
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Book Description
Author:
Publisher: GRIN Verlag
ISBN: 334655063X
Category : Business & Economics
Languages : de
Pages : 67
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Book Description
Studienarbeit aus dem Jahr 2020 im Fachbereich BWL - Bank, Börse, Versicherung, , Sprache: Deutsch, Abstract: The study examines the impact of capital structure on the profitability of Nigerian quoted insurance companies with specific emphasis on AIICO Plc which is one of the 15 quoted insurance companies in Nigeria. The scope covers the period of ten (10) years (2010 to 2020). AIICO PLC was selected based on the criteria of data availability. The study assists financial managers of firms to determine the proportion of equity capital and debt capital (capital structure) to obtain the debt financing mix that will optimize the value of the firm. This study, therefore, has contributed to the literature by examining capital structure and profitability of Nigerian quoted insurance companies. The study aids in the understanding of the impact of capital structure on insurance profitability. This has helped us to understand the impact of capital structure in profitability of Nigeria quoted insurance companies. The outcome from this study will help decisions on capital structure and allow the policy makers in formulating informed policies on capital structure and also to measure the implications of such policies on the operations of quoted insurance companies. This will go a long way in helping investors in deciding whether to pull out their share in pursuance of capital gains or preserve their stake in a corporation. The study will contribute to existing body of knowledge by investigating capital structure and profitability of Nigerian quoted insurance companies.
Author: Nagendra Marisetty
Publisher:
ISBN:
Category :
Languages : en
Pages : 5
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Book Description
Capital Structure is the combination of debt and equity and is one of the important decisions of finance. Capital Structure decision is of significant importance to a firm irrespective of its nature and size of the firm as it has the direct impact on the profits. Therefore, choosing an appropriate combination of debt and equity is of essential for the finance manager because it also helps in growth and expansion of the business. To survive and to meet the requirements of debt and equity holders, the company has to earn good profit and maintain proper debt and equity position. This paper makes an attempt to identify the relevance of capital structure on profitability of ten BSE SENSEX companies from different industries over the period of 10 years from 2007 to 2016. The data has been analysed using debt equity ratio, profitability ratios, and descriptive statistics like mean, standard deviation, skewness, covariance and correlation. Two tail t-test has been used to measure the correlation between debt equity ratio and other profitability ratios.
Author: Wilbur G. Lewellen
Publisher:
ISBN:
Category : Business & Economics
Languages : en
Pages : 148
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Author: Tariku Negasa
Publisher: LAP Lambert Academic Publishing
ISBN: 9783659449802
Category :
Languages : en
Pages : 80
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Book Description
This book aims to investigate the effect of capital structure on firms' profitability with special emphasis on Ethiopian large private manufacturing firms. This book contributes a piece of empirical evidence for a theory of capital structure, in Ethiopian context. The decision regarding firm's capital structure choice is an important issue for financial managers, because it is very much influential on the firm's profitability and value. In today's dynamic business world, for a sound operation the companies, financial managers' decision regarding capital structure should have to have a greater consideration on searching of its optimum level. In general, the firm's capital structure decision affects the two major objectives of financial management, i.e. firm's profit maximization and shareholders' wealth maximization.
Author: John Fred Weston
Publisher: Holt, Rinehart and Winston of Canada
ISBN: 9780039200022
Category : Corporations
Languages : en
Pages : 698
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Book Description
Author: Inoimara Jacobs
Publisher:
ISBN:
Category : Curaçao
Languages : nl
Pages :
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Author: Benjamin M. Friedman
Publisher: University of Chicago Press
ISBN: 0226264238
Category : Business & Economics
Languages : en
Pages : 404
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Book Description
The research reported in this volume represents the second stage of a wide-ranging National Bureau of Economic Research effort to investigate "The Changing Role of Debt and Equity in Financing U.S. Capital Formation." The first group of studies sponsored under this project, which have been published individually and summarized in a 1982 volume bearing the same title (Friedman 1982), addressed several key issues relevant to corporate sector behavior along with such other aspects of the evolving financial underpinnings of U.S. capital formation as household saving incentives, international capital flows, and government debt management. In the project's second series of studies, presented at the National Bureau of Economic Research conference in January 1983 and published here for the first time along with commentaries from that conference, the central focus is the financial side of capital formation undertaken by the U.S. corporate business sector. At the same time, because corporations' securities must be held, a parallel focus is on the behavior of the markets that price these claims.
Author: Sharjil M. Haque
Publisher: International Monetary Fund
ISBN: 1589064127
Category : Business & Economics
Languages : en
Pages : 51
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Book Description
We study the impact of the COVID-19 recession on capital structure of publicly listed U.S. firms. Our estimates suggest leverage (Net Debt/Asset) decreased by 5.3 percentage points from the pre-shock mean of 19.6 percent, while debt maturity increased moderately. This de-leveraging effect is stronger for firms exposed to significant rollover risk, while firms whose businesses were most vulnerable to social distancing did not reduce leverage. We rationalize our evidence through a structural model of firm value that shows lower expected growth rate and higher volatility of cash flows following COVID-19 reduced optimal levels of corporate leverage. Model-implied optimal leverage indicates firms which did not de-lever became over-leveraged. We find default probability deteriorates most in large, over-leveraged firms and those that were stressed pre-COVID. Additional stress tests predict value of these firms will be less than one standard deviation away from default if cash flows decline by 20 percent.
