Abstract:
This research investigates the impact of capital structure on performance of
manufacturing companies’ listed Colombo stock exchange (CSE). Capital
structure is the combination of debt and owners’ equity. Objective of this study
is to find out relationship between capital structure and firm performance
while searching factors which are significantly affect performance of listed
manufacturing companies. This study uses panel data of 16 manufacturing
sector companies listed in CSE for the period of 8 years (2009 to 2016). The
researcher is use descriptive statistics, correlation and multiple regressions for
analysis purpose. The researcher develops five models by considering five
different performance measurements as dependent variable. Namely; Net
profit ratio (NPR), Gross profit ratio (GPR), Return on asset (ROA), Return
on equity (ROE) and Return on capital employed (ROCE). Further researcher
is uses Debt to equity ratio (DTE), Debt to asset ratio (DTA), Long term debt
ratio (LTDR) and Short term debt ratio (STDR) as explanatory variables for
the study. Results reveals except long term debt ratio, other explanatory
variables have negative relationship with firm performance and all five
regression models accept long term debt ratio as significantly effects to firm
performance.
