The relationship between the capital structure and profitability of Philippine manufacturing companies under the food and beverages sub-sector

• Main Authors: Deroca, Mary Franses Athina F., Mendoza, Maria Ira Camille D.
• Format: text
• Language: English
• Published: Animo Repository 2013
• Subjects: Corporations > Philippines; Food industry and trade > Philippines; Beverage industry > Philippines; Finance and Financial Management
• Online Access: https://animorepository.dlsu.edu.ph/etd_bachelors/18335
• Institution: De La Salle University

One of the vital decisions a financial manager must take is the capital structure decision because the decision regarding when, where, and how funds were acquired was critical as maximizing shareholders return should be performed while taking minimum risk (Management Study Guide, n. d.). In this study, the relationship between the capital structure and the profitability of twelve (12) listed Philippine manufacturing firms operating under the food and beverage sub-sector in the Philippine Stock Exchange (PSE) were determined and analyzed for the years 2001 to 2012 (12 years). The results showed that the models GPR, NPR, OPR, ROI, and EPS were significant. Among these, DA, CG and IC had a positive and significant relationship with GPR, DE and IC with NPR, and DE and DA with OPR. On the other hand, DE had a positive and significant relationship with ROI. DA and IC were significant in EPS and the dependent variable more likely increased as long as the companies were company6 and company10. Ultimately, capital structure had a generally positive relationship on profitability on the sample tested.