Abstract:
Capital structure refers to the percentage of money at work in a company.
There are two forms of capital: equity capital and debt capital. The firm’s
capability of accomplish the needs of its stakeholders is closely related to the
firm’s Capital Structure decisions. Capital Structure decision is to find out the
best mix of debts and equity that a company uses to finance its business. This
analysis performs to identify the relationship between Capital Structure and
performance of the food and beverage companies in Sri Lanka, The
examination performs using 15 companies listed on the Colombo Stock
Exchange covering the years 2010-2015. The review utilizes Return on assets
as dependent variable as well as the three capital structure measure Short Term
Debt to Total Assets, Long Term Debt to Total Assets & Total Debt To Equity
as autonomous variable. Descriptive, Regression and correlation analysis use
as a techniques for measure the variables. The outcome reveals a positive
relationship between the Short-Term Debt to Total Assets and Return on
Assets. However there is a negative relationship between the Long-Term Debt
to Total Assets and Return on Assets. The relationship between Total Debt
and Return on Assets show a positive association as these findings analysis
discovered that there is significant relationship between capital structure and
performance of the listed food and beverage industry in Sri Lanka.
Furthermore increasing short term debt within an organization will lead to
enhance the performance of the food and beverage industry in Sri Lanka
nevertheless keeping more long term debt will lead to decrease the
performance of the listed food and beverage industry in Sri Lanka.
