Assessing the Strategic Influence of Capital Structure Decisions on Corporate Profitability

This study examines the relationship between capital structure decisions and corporate profitability across diverse industries, focusing on the strategic implications of debt-equity configurations. Using secondary financial data from 50 listed firms in manufacturing, pharmaceuticals, IT, infrastructure, and consumer goods sectors (2019–2023), the research employs descriptive statistics, correlation, and regression analyses. Findings reveal a moderate negative correlation between high leverage and profitability (ROE, ROA), particularly in asset-light sectors, while capital-intensive industries benefit from moderate debt due to tax shields. Firm size, asset tangibility, and sector-specific norms significantly influence optimal capital structuring. The study highlights the absence of a universal optimal capital structure, emphasizing context-specific strategies. Practical recommendations include dynamic debt monitoring, diversified financing, and alignment with operational risk profiles. The research contributes to capital structure theory by bridging empirical gaps in emerging markets and offers actionable insights for financial managers and policymakers.