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The impact of capital structure on the profitability of enterprises in the real sector of the economy

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  • Liudmyla Levaieva

Abstract

The purpose of this study was to determine the impact of capital structure on the profitability and financial stability of enterprises in the real sector of the economy of Ukraine. The study was based on an empirical comparative financial analysis, within which the methods of financial analysis, ratio analysis, comparative analysis and correlation analysis were applied to assess the relationship between capital structure and profitability indicators of enterprises. The results of the study showed that the debt-to-equity ratio of Private Joint Stock Company “Interpipe NTRP” decreased from 3.08 in 2022 to 0.83 in 2024, while equity increased from UAH 7.5 billion to UAH 27.2 billion, and net profit increased from UAH 9.2 billion to UAH 11.8 billion. For Joint Stock Company “Ukrzaliznytsia”, an increase in the debt-to-equity ratio was established from 0.31 in 2023 to 0.65 in 2025 and the preservation of unprofitability, with the largest net loss of UAH 7.7 billion in 2025. Analysis of the Joint Stock Company “Construction Company “Ukrbud” showed that even with a high level of financial autonomy, the company remained unprofitable, while net loss increased to UAH 13.5 million in 2024. Correlation analysis confirmed a strong direct relationship between the Debt-to-Equity Ratio and Return on Equity at 0.96, as well as between the Debt-to-Equity Ratio and Return on Assets at 0.82. The results confirmed that moderate use of debt capital contributed to increasing the profitability of enterprises, however, the effectiveness of financial leverage depended on the level of operating profitability, financial costs and overall financial stability of enterprises. The practical significance of the study lies in the possibility of using the obtained results by enterprise managers, financial analysts and investors to optimise the ratio of equity and borrowed capital and improve financial stability under conditions of economic instability

Suggested Citation

  • Liudmyla Levaieva, 2026. "The impact of capital structure on the profitability of enterprises in the real sector of the economy," E-Forum Working Papers, Economic Forum, vol. 16(2), pages 52-65, May.
    • Handle: RePEc:cuc:eforum:v:16:y:2026:i:2:p:52-65
    DOI: https://doi.org/10.62763/ef/2.2026.52
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    References listed on IDEAS

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    1. Minzhi Wu & Emili Tortosa-Ausina & Paula Cruz-García, 2024. "The impact of diversification on the profitability and risk of Chinese banks: evidence from a semiparametric approach," Empirical Economics, Springer, vol. 67(6), pages 2565-2606, December.
    2. Tesfa Nega Tesema, 2024. "The effect of capital structure on performance: empirical evidence from manufacturing companies in Ethiopia," Cogent Economics & Finance, Taylor & Francis Journals, vol. 12(1), pages 2300926-230, December.
    3. José Matheus Ferreira Gomes dos Passos & Marcelo Nunes Fonseca & Rodrigo Martins Baptista & Wilson Toshiro Nakamura & Jonas Poutilho de Morais Pereira, 2026. "Trends in Capital Structure: A Bibliometric Analysis to Support the Construction of Decision-Support Methodologies," IJFS, MDPI, vol. 14(3), pages 1-21, March.
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