Abstract:
Purpose. The study investigates the relationship between debt financing and the profitability of
Food and Care companies listed on the Pakistan Stock Exchange (PSX). It
whether increasing debt structure affect firm profitability positively or negatively, providing
insights for management and investors. It aims to determine whether increasing debt structure
affect film profitability positively or negatively, providing insights for management and investors.
aims to determine
Methodology: The study uses a quantitative research design, analyzing secondary data from 18
consumer goods companies listed on PSX over a period of 10 years (2015 - 2024). Profitability is
measured using ROE. The analysis is conducted using multiple regression via stata 17 to assess
the impact of debt structure on profitability. Liquidity was introduced as a moderator to test
whether firms with better liquidity manage debt more profitably.
Findings: The results show that Short-term debt has no impact on ROE. Long-term debt has a
negative and significant impacts on ROE. These findings suggest that reliance on short-term
borrowing increases profitability, while long-term debt does harm performance.
Originality / value: This research adds value by focusing on a specific and underexplored segment
of the Pakistani market—consumer goods firms—providing targeted insights for financial
managers and investors regarding optimal capital structure.
