The Impact of Capital Structure on Financial Performance of Different Sectors in India

The capital structure is a very important subject in the field of financial management because it partly affects its financial performance. The main aim of conducting this study was to investigate the impact of capital structure (Debt, Equity ratio) on financial performance measured by EPS, Return on Investment, Capital Turnover, Debt to Net Worth, Net Profit Ratio, Return on Capital Employed and Return on Equity. On the basis of objectives the data from mainly three sectors were taken from 2003–2012 of 60 listed companies taken from automobile, electronic and metal industries. The analysis was done by applying correlation and regression statistics. The findings indicated that the capital structure has a no significant impact on financial performance in the automobile sector on the other hand electronic and metal sector had shown that financial performance was significantly affected by capital structure. An insignificant either negative or positive relationship was observed between dependent and independent variables.