Abstract:
Purpose- Major aim of this study was to evaluate the impact of capital structure (debt-to-
equity ratio) on the financial-performance (ROA/ROE/GPM/NPM) of any company in the
textile sector of Pakistan.
Methodology/sample- The study involved usage of secondary data which was taken from
stock exchange portals for 6 years of different textile giants with origin in Karachi. To
analyze the data, Regression, ANOVA and Correlation tests were applied.
Findings- The analysis and comparative results clearly suggested that by increasing the level
of debts, ROA and ROE tend to reduce. It was justified by the inverse relation shown through
this research.
Practical Implications- The outcomes of the research might help the corporate decision
makers and government policy formulators to find, manage and maintain an optimal capital
structure where costs of debts never surpass the costs of equity in order for the companies to
survive in long-run.
