Exploring Debt Dynamics: The Impact of Capital Structure ‎on Profitability in The Indian Food and Beverage Industry

Rupali S. Ambadkar; Tejal Mitesh  Solanki

doi:10.14419/try7bw41

Authors

Rupali S. Ambadkar Associate Professor, Department of Accounting and Financial Management, Faculty of Commerce, The Maharaja Sayajirao University ‎of Baroda https://orcid.org/0000-0002-2402-4141 (unauthenticated)
Tejal Mitesh Solanki Research Scholar (JRF), Department of Accounting and Financial Management, Faculty of Commerce, The Maharaja Sayajirao ‎University of Baroda https://orcid.org/0009-0007-3950-5849 (unauthenticated)

DOI:

https://doi.org/10.14419/try7bw41

Published

18-08-2025

Keywords:

Capital Structure; Indian Food and Beverage Companies; Liquidity; Panel Regression; Profitability; Size; Tangibility

Abstract

This study examines the impact of Capital Structure on the Profitability of Indian Food and Beverage companies listed on the S&P BSE ‎FMCG Index. The analysis is based on a balanced panel of 40 companies, comprising 400 observations over ten years from 2013 to 2023. ‎Capital structure is represented by three measures: long-term debt to total assets (LDA), short-term debt to total assets (SDA), and total debt ‎to total assets (TDA). Profitability is measured using return on equity (ROE) and return on assets (ROA). Tangibility (TANG), firm size ‎‎(SIZE), and liquidity (LIQ) serve as control variables. Panel regression techniques using random effects and fixed effects models are ‎employed to test the hypotheses. The results reveal that all debt measures (LDA, SDA, and TDA) have a significantly negative impact on ‎ROA, whereas no significant relationship is found between debt measures and ROE. Tangibility and liquidity significantly negatively ‎impact profitability, while firm size exhibits a significant positive impact. The study contributes to the existing literature and offers practical ‎insights, emphasizing the importance of optimizing debt levels, enhancing liquidity management, and improving asset efficiency as key ‎strategies to drive profitability in Indian Food and Beverage companies‎.

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How to Cite

S. Ambadkar, R., & Solanki , T. M. . (2025). Exploring Debt Dynamics: The Impact of Capital Structure ‎on Profitability in The Indian Food and Beverage Industry. International Journal of Accounting and Economics Studies, 12(4), 491-498. https://doi.org/10.14419/try7bw41

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