Impact of Financial Structure on Profitability: Evidence from Selected Information Technology Companies in India

Financial structure determines how firms finance their assets and operations through equity, retained earnings and debt. This study examines the impact of financial structure on the profitability of selected IT companies in India, focusing on Tech Mahindra Ltd. and Wipro Ltd. The study uses secondary financial data from the Profit & Loss Account and Balance Sheet for the period from March 2017 to March 2026. Financial structure is measured using Debt–Equity Ratio, Debt-to-Total Assets Ratio and Interest Coverage Ratio. Profitability is evaluated through Return on Assets, Return on Equity and Net Profit Margin using ratio, trend, correlation and regression analysis. The findings show that Tech Mahindra maintained lower financial leverage and stronger interest coverage, while Wipro recorded a higher average net profit margin. Regression results indicate that the selected financial-structure variables significantly explain variations in Return on Assets. The study recommends maintaining an optimal debt–equity balance, controlling financing costs and strengthening internal sources of finance to improve profitability.