Impact of Capital Structure, Dividend Payouts, Profitability and Asset Turnover On Financial Performance of Companies

Abstract

This research paper aims to examine, evaluate and understand the way variables affect financial performance of companies. Capital Structure, Dividend Payouts, Profitability and Asset Turnover are few essential variables that are often used for evaluating the financial performance of companies. Furthermore, they act as indicators for how well companies are being managed and how much value they hold for their stakeholders. Several studies have examined these variables independently time to time in the past providing valuable information regarding the relationship between these variables. The previous research papers have been thoroughly studied and will become the basis for further evaluation of these variables under study. While examining previous work, it was observed that firm’s financial performance has never been examined with these variables together. All previous studies have mostly evaluated one or two independent variables in their research and have tried to explore their relationship with the financial performance of firms. Investigating all variables simultaneously under this study aims to provide more substantial results than any of the earlier studies. Previous investigations have become the basis for an in-depth examination on such variables and have helped taking it a step further. The data used in this research is secondary in nature and is gathered from Pakistan Stock Exchange official website. The sample consists of 50 companies listed in Pakistan Stock Exchange for the period 2009-2019 that relates to the Cement Industry of Pakistan. To study the relationship between variables and to evaluate financial performance of firms; TDE, ROA and Profitability ratios have been used. This study has employed the statistical tool of SPSS v23.0 to explore the relationship between enlisted companies on PSX their performances. The findings of this study help the investors and researchers to better understand the effect of capital structure, earning per share, asset turnover ratio and return on asset on the performance of the firms.