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Impact of Debt Management on Profitability of Large Non-Financial Firms in Serbia

Author

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  • Milošev Ivana

    (Phd student, University of Novi Sad, Faculty of Economics Subotica, Republic of, Serbia)

Abstract

Profitability is substantial for any firm to maintain business and enable long-term sustainability. Firms’ decision on indebtedness and capital structure have influence on potentials for prosperity, growth, and development. This study aims to find a new empirical evidence on the influence of debt (debt ratio and debt to equity ratio) on firm profitability (ROA), with application to 50 non-financial firms with highest revenues in Serbia in 2019 during 2016-2019 using multiple ordinary least squares regression model. After control for size, liquidity and tangibility of assets, the results find statistically significant correlation and negative influence of debt ratio and capital structure on firm profitability.

Suggested Citation

  • Milošev Ivana, 2021. "Impact of Debt Management on Profitability of Large Non-Financial Firms in Serbia," Economic Themes, Sciendo, vol. 59(4), pages 461-477, December.
    • Handle: RePEc:vrs:ecothe:v:59:y:2021:i:4:p:461-477:n:3
    DOI: 10.2478/ethemes-2021-0026
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    More about this item

    Keywords

    total debt; capital structure; firm profitability in Serbia;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • C36 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Instrumental Variables (IV) Estimation

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