The impact of capital structure on financial performance
Keywords:Capital structure, Companies, Debt ratio, Financial performance, Return on asset, Return on equity.
The main purpose of this study is to measure the impact of the capital structure on the financial performance of commercial companies in Kosovo. Specifically, it aims to measure the relationship between the ratio of total debt to capital and the ratio of return on capital employed (ROE), as well as the relationship between the total debt-to-equity ratio and the return on assets (ROA) ratio. Panel data were used to measure the impact of the capital structure on the financial performance of commercial companies in Kosovo for the period 2014-2019. The capital structure indicators included in the study were total debt and total equity, while performance indicators were represented by return on assets (ROA) and return on equity (ROE). The results show that between the capital structure and the financial performance of commercial companies in Kosovo during the study period, there is a strong relationship between assets on the one hand and total capital and total liabilities on the other. The findings of this research are beneficial to investors, lenders, and corporations, and can help financial managers choose the best capital structure to increase the firm's worth.