CAPITAL STRUCTURE AND FINANCIAL PERFORMANCE OF SERVICE SECTOR LISTED IN BSE SENSEX

Authors

  • Dr. Rachna Jawa Associate Professor, Shri Ram College of Commerce, University of Delhi)
  • Ms. Monika Research Scholar, DCRUST, Murthal, Hryana

Keywords:

Capital structure, Service Sector, Financial Performance, Debt to Equity, Return on Equity, Companies

Abstract

Capital structure is a blend of equity and debt which helps any corporation to make it financial performance better and competitive by using the correct mixture. This combination plays an integral part of any company’s finance which can help them to outperform. This paper seeks to show association among capital structure & financial performance of the companies which come under the category of service sector which are listed on BSE SENSEX during a five year period (2016-17 to 2020-2021). The study sample consists of top 6 companies which are listed on BSE according to market capitalization excluding banking and financial companies. Data is gathered with the help of financial statements, balance-sheets of the companies with help of CMIE Prowess and analysed with the help of SPSS 20 and MS Excel. Regression analysis was used to observe the outcome of capital structure on financial performance of companies in which debt-equity ratio was taken as a proxy for capital structure and for measuring financial performance of corporation, return on equity is taken as proxy. The result reveals that debt equity ratio is negatively correlated with ROE, which means that capital structure has no impact on the financial performance of the top 6 companies and result of this study also proves the theory of Modigliani and Miller which under that capital structure have no impact on financial performance of different firms. The results of this study are greatly helpful for academic world and corporate for better decision making.

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Additional Files

Published

15-04-2022

How to Cite

Dr. Rachna Jawa, & Ms. Monika. (2022). CAPITAL STRUCTURE AND FINANCIAL PERFORMANCE OF SERVICE SECTOR LISTED IN BSE SENSEX. International Education and Research Journal (IERJ), 8(4). Retrieved from https://ierj.in/journal/index.php/ierj/article/view/2432