THE INFLUENCE OF CAPITAL STRUCTURE ON THE FINANCIAL PERFORMANCE OF SONALI BANK LIMITED

Authors: Sabnaj1, H. Begum1, and M. M. Uddin2*
* Corresponding Author
Published on 2023-07-30
DOI: https://www.doi.org/10.59125/JST.21108
Abstract:

This study aims to explore the influence of capital structure on the financial performance of Sonali Bank Limited (SBL). This study also aims to measure the correlation between different elements of capital structure and profitability. Secondary data have been collected from the annual reports of Sonali Bank Limited during the period of 2010-2021 (12 years). In this study four performance measures; earnings per share (EPS), return on equity (ROE), return of asset (ROA), and Tobin’s Q; as dependent variables and three capital structure ratios; short-term debt to the total asset (STDTA), long-term debt to the total asset (LTDTA) and total debt to total asset (TDTA) ratios; as independent variables have been used. This study finds that EPS, ROE, and ROA have a significant negative relation with TDTA and STDTA whereas Tobin’s Q has a significant positive relation with TDTA. EPS, ROE, and ROA have insignificant positive relations with LTDTA and Tobin’s Q has negative insignificant relation with LTDTA and STDTA.

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