Analyzing Liability Structure in Shaping Financial Performance

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The observed capital structure reveals that higher long-term debt reduces profitability.
Empirical data analysis highlighted a statistically significant negative correlation between long-term debt and return on assets.
Application of panel data estimation approaches established the Fixed Effects Model as the most fitting for the dataset.
Excessive long-term borrowing can lead to financial constraints, suggesting the need for optimized financial strategies.

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Analysis shows long-term debt negatively affects financial performance in pharmaceutical firms, highlighting optimization needs.

Muhklis et al. (2025) studied this question.

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