THE EFFECTS OF CAPITAL STRUCTURE ON FIRM’S PROFITABILITY (A CASE STUDY OF SAMSUNG COMPANY LIMITED)

From many decades the issue of capital structure is under study. The firms' capital structure constitutes a difficult decision it may involve several factors, such as risk and profitability. Capital structure refers to the various financing options of firms' assets. A business concern goes for different mixture of debt and equity. The main purpose of this research study was to re-investigate the effects of capital structure on firm's profitability of Samsung Company Limited. The semi-annual time series data from 1998 S1 to 2018S2 has been used. ROA (Return on Asset) is taken as measure of profitability. Three debt ratios, STD (short term debt ratio) calculated by dividing the short term debt by total assets, LTD (long term debt ratio) calculated by dividing the long term debt by total assets, TD (total debt ratio) calculated by dividing the total debt by total assets, while Growth and Size are taken as control variables. This study utilized the secondary data of Samsung Company Limited taken from the annual reports of Company available at the website of Company. A multiple linear regression model is developed to test the hypothesis. Three hypotheses are developed to test the effects of capital structure on profitability. Multiple regression models were tested to check the effects on profitability. This study employed descriptive statistics and regression analysis to get the desire results. In order to estimate model, stationary level for data is measured which is done through unit root test. Next the co. integration is done and then Johnson co. integration test was applied to show the long run effects of capital structure on profitability. Result showed the negative relation of debt ratio and positive relation of growth and size on firm's profitability