Quantitative analysis shows profitability and firm size significantly affect capital structure in the firm, indicating financial strategies for capital-intensive sectors.
Key Points
Firm size has a negative and statistically significant effect on capital structure, suggesting larger firms rely less on debt.
Profitability positively influences capital structure; more profitable companies are prone to use debt for financing.
Liquidity shows a negative but insignificant impact on capital structure, implying it doesn't largely dictate financing decisions.
The three independent variables collectively have a significant effect on capital structure, accounting for 26.7% of variations.