Impact of Capital Structure and Liquidity Conditions on the Profitability of Pharmaceutical Sector of Pakistan

Main Article Content

Rukhsana Rasheed
Mehwish Shahid
Munaza Mukhtar
Mazhar Nadeem Ishaq

Abstract

This study was conducted to find the impact of capital structure and liquidity condition on the profitability of pharmaceutical firms listed with Pakistan Stock Exchange (PSX). The dataset was comprised of eleven years 2010 to 2021. To assess profitability level, to dimensions return on assets (ROA) and gross profit margin (GPM) were used. The capital structure was measured through debt to equity ratio (DER) and debt to total funds (DTF). The liquidity level was measured through current ratio (CR) and acid test ratio (ATR). The OLS regression, fixed and random effect models were used for analysis. The findings proved that high debt to equity ratio significantly and negatively affect the profitability. The liquidity conditions have positive association with profitability of firms. The study suggested that owners and company managers should use optimal value of debt and liquidity conditions for profit maximization and to reduce the cost associated with debt capital.

Article Details

How to Cite
Rasheed, R., Shahid, M. ., Mukhtar, M. ., & Ishaq, M. N. . (2022). Impact of Capital Structure and Liquidity Conditions on the Profitability of Pharmaceutical Sector of Pakistan. IRASD Journal of Management, 4(2), 135–142. https://doi.org/10.52131/jom.2022.0402.0068
Section
Articles
Author Biographies

Mehwish Shahid, The Govt. Sadiq College Women University, Bahawalpur, Pakistan

Department of Management Sciences

Munaza Mukhtar, The Govt. Sadiq College Women University, Bahawalpur, Pakistan

Department of Management Sciences

Mazhar Nadeem Ishaq, The Islamia University of Bahawalpur, Pakistan

Department of Economics

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