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The Relationship Between CS and Profitability: Evidence on Chinese List Firms
- 1 Nanjing Audit University, No. 77, Beiweit Road, Fenghuang Street, Gulou District, Nanjing City, Jiangsu Province, China
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Abstract
One of the central questions that continues to be discussed in the financial sector is how a company's capital structure (CS) impacts its profitability .In China, with the gradual improvement of the market economic system and capital market’s development, this relationship is particularly concerned .This study analyses the correlation between metrics such as long- and short-term debt ratio (LSDR), gearing ratio (GR), total assets (TA), current ratio (CR), and return on total assets (ROA) to understand how a company's financial performance is affected by the allocation of its CS. In this regard, many studies are based on a particular industry, and the results differ. This experiment examines the data of 100 companies from different industries from 2010-2021 and provides strategic recommendations for firms to optimize their CS by providing data analysis and regression models. Multicollinearity Problem was also tested with VIF value, together with self-related issue was examined by Durbin Watson values. This research will help managers to optimize the current assets and debt structure, balance financing methods, and monitor financial indicators to enhance debt repayment and profitability.
Keywords
Capital Structure Impact, Profitability, Data Analysis and Model, Financial Indicator Optimization
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Cite this article
Chen,X. (2025). The Relationship Between CS and Profitability: Evidence on Chinese List Firms. Advances in Economics, Management and Political Sciences,155,178-184.
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Volume title: Proceedings of the 3rd International Conference on Financial Technology and Business Analysis
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