Abstract:
The Research work carried out in this project points out better understanding, decision making and factors responsible for adopting and maintaining certain percentage of Capital structure to maximize the profitability. It also covers the comparative analysis of non financial sectors’ key players listed on Karachi Stock Exchange – 100 index and their performance measures in generating that profitability. It is need of every company to generate new finances to operate which could either be from borrowings or from equity injection. This problem can be solved be making decisions about capital structures which refers to the amount of Debt the company has employed to finance its operations and the amount of equity that it has invested in the firm. The profitability of a firm is the revenues it generates through its operations and it depends upon a lot of factors, functions. This research studies the effect of Capital structure proportion on profitability and the factors that affect the decision making process. This project includes research done on the Profitability and the effect of different variables like long term debt, Short Term Debt, Equity etc. on the returns of different firms working in Pakistan. Different techniques are adopted in order to determine the relationships among the dependent and independent variables which includes ratio analysis, Industry average comparisons, Correlation and Regression Analysis on a specific function which determines the relation between dependent and independent variables. This research work can be used as groundwork for future study on capital structure and profitability and will be beneficial for professionals and students in exploring the prospects of Capital structure and Profitability on non financial firms in Pakistan.
