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A Study on the Impact of Capital Structure and Financial Risk of IT Industry

Author

Listed:
  • V. S Abhilash

    (CET School of Management, Thiruvananthapuram, India.)

  • Mohamed Shaheen Anzer

    (CET School of Management, Thiruvananthapuram, India.)

  • G Raju

    (CET School of Management, Thiruvananthapuram, India.)

Abstract

From the past 2 decades, the IT industry is one of the largest employers in India. It also contributes to the nations GDP. Like any firm, even for the IT industries to finance its operations, it has to raise funds. These funds can be raised either by issuing shares or by debt financing. This project aims to study whether the capital structure of the IT industry has any impact on the profitability. The capital structure and profitability of the top 10 IT companies for the past 10 years are taken. The capital structure variables are Debt-Asset ratio and Debt-Equity ratio. The profitability variables are Net profit ratio, Return on Assets, Return on Equity and Return on Capital Employed. Regression analysis has been used to find whether there is any relationship between capital structure variables and profitability variables. Correlation analysis has been used to find the direction of change in profitability variables due to the change in capital structure variables. The profitability of the firm is obtained from Net Profit ratio.

Suggested Citation

  • V. S Abhilash & Mohamed Shaheen Anzer & G Raju, 2021. "A Study on the Impact of Capital Structure and Financial Risk of IT Industry," Post-Print hal-05188045, HAL.
    • Handle: RePEc:hal:journl:hal-05188045
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