case study financial management

The Determinants Of Capital Structure

THE DETERMINANTS OF CAPITAL STRUCTURE

The Determinants of Capital Structure: A Case from Pakistan Textile Sector (Spinning Units)
Pervaiz Akhtar
National University Of Modern Languages, Islamabad
Muhammad Husnain
University Of Agriculture Faisalabad
Muhammad Ahsan Mukhtar
Muhammad Ali Jinnah University, Islamabad

Proceedings of 2nd International Conference on Business Management (ISBN: 978-969-9368-06-6)

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The Determinants Of Capital Structure

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Abstract

Capital structure decisions are among the most important and crucial decisions for any business because of their effect on value and cost of the company. In this paper we have discussed the determinants of capital structure of Pakistani firms. The sample comprised 30 Pakistani textile sector companies. Size, growth, financial cost, profitability, and tangibility are used as independent variables, while leverage is the dependent variable. For analysis purpose descriptive statistics, correlation and regression analysis are used. The results imply that the spinning sector companies are small in size and capitalization so these companies prefer internal financing as compare to external financing.

Keywords: Capital Structure, Leverage, Pakistan Textile Sector, Spinning Sector.

Proceedings of 2nd International Conference on Business Management (ISBN: 978-969-9368-06-6)

The Determinants Of Capital Structure

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Introduction

The Capital Structure Of A Company Is A Particular Combination Of Debt, Equity And
Other Sources Of Finance That It Uses To Fund Its Long-Term Asset. The Key Division
In Capital Structure Is Between Debt And Equity. The Proportion Of Debt Funding Is
Measured By Gearing Or Leverages. There Are Different Factors That Affect A Firm 's Capital
Structure, And A Firm Should Attempt To Determine What Its Optimal, Or Best, Mix Of
Financing.

In Corporate World Discussion Of The Determinants Of Capital Structure Is As Old As The
Economic Revolution Of The

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