Is Profitability Related to Capital Structure Decisions in Indian Cement Industry? An Empirical Investigation through Factor Analysis Approach

Abstract

This study is basically undertaken so as to investigate the independent variables on which the dependent variable i.e. the profitability depends upon for the firms belonging to the Indian Cement Industry. The independent variables taken into consideration for the study which might have some impact on the profitability of Indian Cement Industry are "Business Risk", "Size of the Firm", "Growth Rate", "Debt Service Capacity", "Degree of Operating Leverage", "Dividend Payout" and "Financial Leverage". The above variables determining the Capital Structure of a firm has been taken into consideration after a thorough literature review. It is observed from the study that "Size of the firm " and "Business risk" are significant factors influencing the profitability of the firms of the Indian Cement Industry.