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The Effect of Capital Structure on Profitability: A Study on CBRT Sector Balance Sheets

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  • Duygu ARSLANTÃœRK ÇÖLLÃœ

Abstract

The aim of this study is to analyze the effects of capital structure decisions on the profitability of Turkish real sector firms for the on a sectoral basis for the period of 2010-2019. In the analysis, balance sheets of 17 sectors announced by the CBRT were used and panel data analysis was applied. In the study, while the return on equity, return on assets and net profit margin were used to represent profitability, short-term debt, long-term debt and total debt ratios were taken into account as an indicator of capital structure. In addition, control variables such as size, asset growth, asset tangibility and current ratio that may affect profitability are also included in the analysis. The results show that capital structure variables have a negative and weak effect on profitability. This indicates that the use of more debt harms profitability. In addition, it has been determined that size and current ratio negatively affect profitability.

Suggested Citation

  • Duygu ARSLANTÃœRK ÇÖLLÃœ, 2021. "The Effect of Capital Structure on Profitability: A Study on CBRT Sector Balance Sheets," Fiscaoeconomia, Tubitak Ulakbim JournalPark (Dergipark), issue 3.
    • Handle: RePEc:fis:journl:210309
    DOI: 10.25295/fsecon.971460
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    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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