Corporate Capital Structure And Its Impact On Profitability Evidence From Manufacturing Firms In Ethiopia

The aim of this paper is to provide large sample evidence on capital structure and itsrnimpact on profitability using a new database of large tax payer manufacturing firms inrnEthiopia. The study employs a panel data regression analysis. The dataset comprisesrntwenty four large tax payer manufacturing share companies covering a five-year periodrn(2010-2014 G.C.) using firm level accounting data. Within what is referred to as capitalrnstructure the researcher is able to examine the relationship between capital structurernvariables and profitability. Most sample firms concentrate their borrowing in only one ofrnthese debt types especially short term debt finances and this debt specialization persistsrnovertime. It is also clear from the study that short-term debt to total liability, long-termrndebt capitalization ratio and interest coverage ratio showed positive and significantrnimpact on profitability. Other constituted variables i.e. debt ratio and debt to equity ratiornfound to be insignificant regarding their impact on profitability of sample firms.rnTherefore, no significant linear dependence was detected for debt ratio and debt to equityrnratio versus profitability

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