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|Title: ||Assessing the relationship between capital structure and profitability of industries represented on Ghana Stock Exchange market|
|Authors: ||Muntala, Mohammed|
|Issue Date: ||12-Apr-2016|
|Abstract: ||This study investigates the relationship between capital structure and profitability of industries represented on Ghana Stock Exchange Market covering nine -year period (2005-2013). The study adopted the panel data methodology to examine the effects of capital structure on the profitability of twenty selected firms (financial and non-financial). The linear regression technique was used as an estimation technique for the study. Financial statements of the selected firms were also used to extract data for the study. Ratios such as return on assets, return on equity and net profit margin were used as indicators for determining the profitability of the firm. Short-term debt, long-term debt and total debt ratios were also used as indicators for leverage of the firms.
The result identified that 64% of the total capital of listed firms in Ghana is made up of debts. Of this, 54% constitutes short-term debts while 10% is made up of long-term debts. This indicates that the listed Ghanaian firms are highly leveraged firms and also shows the importance of short-term debts over long- term debts in financing firms (financial and non- financial). The correlation and regression results showed insignificantly negative association between leverage and profitability. This implies that, during the period under study, leverage did not bring about profitability. However, the financial market needs to be improved to reduce cost of short-term debts or encourage internal financing since short- term debt was positively related to profitability. Furthermore, size of listed firms in Ghana revealed mixed result for the study period. On the other hand, growth, indicate a significant positive relationship with profitability.|
|Description: ||A Thesis submitted to the Department of Accounting and Finance, Kwame Nkrumah University of Science and Technology in partial fulfilment of the requirements for the degree of Master of Business Administration (Finance Option)|
|Appears in Collections:||College of Arts and Social Sciences|
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