Research Article | Open Access
The Impact of Capital Structure on Profitability: An Empirical Examination of Selected Firms in Saudi Stock Exchange
Al-Waled Mohammed Omar Ben Gubaer,Hafinaz Hasniyanti Hassan
Pages: 6583-6605
Abstract
The study examines the impact of capital structure on the profitability of listed firms operating in Saudi Arabia. The research applied secondary data from 2015 to 2019 obtained from the chosen Annual Reports of 35 non-financial
listed firms. This study aims to discover the influence and significance of capital structure on profitability, the relationship between capital structure proxies that include long-term debt (LTD), total debt (TD), and debt-to-equity
(D/E) with the profitability represented by return on assets (ROA). A quantitative methodology was applied using random sampling, and the data obtained were examined utilizing excel and SPSS econometric software to produce
descriptive, regression, and correlation results. The findings exposed that the capital structure influences the profitability of Saudi listed companies. The effects were significant with TD and D/E and insignificant with LTD according to the p-value of the correlation coefficient.
Keywords
Capital structure, profitability, long-term debt, debt to equity, return on asset