Examining How Cost of Capital Affects Firm Profitability and Value: Findings from Bangladesh

Reflects the overall return required for the firm to sustain its value through efficient asset management and business operations. Therefore, achieving a balance between financing and capital costs is critical for effective financial management. This study examines how the cost of capital impacts the profitability and value of 120 manufacturing companies listed on the Dhaka Stock Exchange (DSE) from 2017 to 2023. The research findings provide valuable insights for manufacturing firms in Bangladesh, demonstrating that cost of capital does not significantly affect profitability and firm value, allowing firms to focus on scaling and debt management without overemphasizing capital costs. This highlights the critical role of firm size and leverage in improving financial outcomes. Consequently, the study recommends that companies prioritize increasing their scale while effectively controlling their cost of capital.