Abstract:
This study has focused mainly on investigating the relationship between capital structure and leverage in textile sector of Pakistan. This study has considered size, tangibility, profitability, growth, non-debt tax shield, effective tax rate, net commercial trade position and liquidity as the independent variables. Whereas, leverage has been considered as the dependent variable in this study. However, this study has finalized textile sector of Pakistan to testify the relationship between variables mentioned above. The major emphasis in this study has been on assessing the relationship between size, tangibility, profitability, growth, non-debt tax shield, effective tax rate, net commercial trade position and liquidity (independent variables) and size, tangibility, profitability, growth, non-debt tax shield, effective tax rate, net commercial trade position and liquidity (dependent variable) in textile sector of Pakistan. Secondary sources of data (annual financial statements) have been used for data collection regarding variables of this study from the period of 2014 – 2019. A sample size of 270 observations has been finalized to represent the entire population. Collected data has then been analyzed through statistical instruments such as correlation and regression by using Strata. Based on the findings, it has been concluded that capital structure (size, tangibility, profitability, growth, non-debt tax shield, effective tax rate, net commercial trade position and liquidity) has significant impact on leverage in textile sector of Pakistan.