Muhammad Nawzad Ali1 and Amanj Mohamed Ahmed2
1,2 Darbandikhan Technical Institute, Sulaimani Polytechnic University,
Sulaimani, Kurdistan Region, Iraq
Email: [email protected]
DOI: 10.23918/ICABEP2021p34
Abstract
The need for organizations to put together an efficient and effective capital structure has become very crucial to the very health and existence of corporate organizations today. The aim of this study is to ascertain the effect equity and leverage as sources of business finance has any bearing with the level of profits that firms make. Return on Assets is being used as the measure of financial performance, Debt to Equity Ratio, Equity Ratio and Equity to Capital Ratio are being chosen as the measure of the source of funding for firms. The data in this study is based on the secondary data and it collected from the past and present performance of the selected firms. To achieve the research goal, return on assets is being tested as the measure of financial performance, debt to equity ratio, equity ratio and equity to capital ratio are being chosen as the measure of the source of funding for firms. The result collected showed that debt to equity is a significant factor in determining the financial performance for the selected companies. However, debt to asset showed no significance with companies’ financial performance. The result also shows the analysis revealed that there was a negative significant between debt to equity with return on equity, return on asset as well as net profit margin.
Keywords: capital structure, financial performance, corporate organizations and profitability.
ICABEP2021
International Conference on Accounting, Business, Economics and Politics
3rd joint conference organized by the collaboration of the Faculty of Administrative Sciences and Economics,
Tishk International University, College of Administration and Economics, Salahaddin University-Erbil, and
University of Szczecin, Poland.
