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Capital Structure and Profitability of Small and Medium Enterprises in Lusaka, Zambia

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  • Katolo, Gospel

    (University of Zambia)

Abstract

This study examines the relationship between capital structure and profitability among small and medium enterprises in Lusaka, Zambia. A quantitative cross-sectional design was used, and structured questionnaires were administered to a target sample of 397 enterprises. A total of 355 usable responses were obtained, representing an 89.4% response rate. Profitability was measured using ordinal categories of return on assets, while capital structure was represented by total debt to assets and long-term debt to assets; sales growth was included as a control variable. The instrument demonstrated acceptable internal consistency (Cronbach's alpha = 0.71). Pearson correlation showed a weak positive association between total debt to assets and return on assets (r = 0.159, p = 0.003). The multiple regression model was statistically significant (F(3,351) = 9.939, p

Suggested Citation

  • Katolo, Gospel, 2026. "Capital Structure and Profitability of Small and Medium Enterprises in Lusaka, Zambia," African Journal of Commercial Studies, African Journal of Commercial Studies, vol. 7(5).
    • Handle: RePEc:cwk:ajocsl:2026-082
    DOI: 10.59413/ajocs/v7.i5.16
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    Keywords

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    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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