ANALYSIS OF CAPITAL STRUCTURE DETERMINANTS: SELECTED SERVICE COMPANIES

Abstract

Capital structure is one of the most significant features of organizational finance and should be managed efficiently. The present study is conducted with a regression analysis, to analyze the determinants of capital structure of service companies. For conducting the present study, annual reports from 11 service companies, listed in stock exchange in India (2017), is collected for last 5 years i.e. from 2012 to 2016. Analysis shows that Liquidity and dividend payout ratio are positively correlated with profitability and negatively correlated with other variables. Profitability is positively correlated with size and growth. It is negatively correlated with the non debt tax shield and tangibility. Size is positively correlated with the ndts, tangibility and growth. There is a positive correlation between ndts, tangibility and growth. Regression result shows that the size, tangibility and growth have positive impact on debt equity ratio and liquidity, dividend payout ratio, profitability and non debt tax shield have negative impact on debt equity ratio.