The present study entitled “A Study on the Impact of Capital Structure on Profitability of TataMotors” aims to examine the relationship between financing decisions and the profitabilityof abusiness organization. Capital structure represents the proportion of debt and equity used byafirmto finance its operations and long term investments, while profitability reflects the ability of acompany to generate earnings from its activities. The study focuses on understanding howdifferentcombinations of debt and equity influence the financial performance of a firm. The research is mainly based on secondary data collected from books, research articles, financialreports and published sources. Ratio analysis and comparative analysis have been used as majortools to evaluate the impact of capital structure on profitability. Key financial indicators suchasDebt–Equity Ratio, Return on Equity, Return on Assets, Net Profit Margin and Earnings Per Sharehave been considered for analysis. The findings of the study indicate that capital structure has a significant influence on profitability. Moderate use of debt helps improve profitability through financial leverage, whereas excessivedebtincreases financial risk and may reduce overall earnings due to fixed interest obligations. Equityfinancing provides financial stability but may dilute returns to shareholders when used excessively. Therefore, maintaining an optimal balance between debt and equity is essential for improvingprofitability and ensuring long term financial stability. The study concludes that effective capital structure decisions play a crucial role in maximizingprofitability and enhancing organizational performance. Proper financial planning, regularmonitoring of financial ratios and balanced financing policies are necessary for sustainable growthand efficient financial management.
TANYA DWIVEDI (Fri,) studied this question.