IMPACT OF CAPITAL STRUCTURE ON FIRM PERFORMANCE: A STUDY OF FMCG COMPANIES IN INDIA

This study examined the impact of capital structure on firm performance of some selected FMCG companies
in India. The annual financial statements of six manufacturing companies listed on the Indian stock exchange
ranging from 2018-2021 were used for this study. A firm's capital structure is typically expressed as a debtto-
equity or debt-to-capital ratio. The study used fixed effect regression model to test the significant impact
of capital structure on firm's performance, Hence, return on asset (ROA), return on equity (ROE) and earnings
per share EPS were used as proxies for firms performance while equity ratio and debt ratio as indicators for
capital structure, the finding reveal that capital structure has positive significant effect on financial
performance of selected firms in India. A firm can adopt a capital mix of either 100% equity and zero debt
or 100% debt with zero equity or any combination of both.