Determinants of Capital Structure on Trading and Manufacturing Enterprises: A Case of Nepal

Abstract

This study mainly aimed at examining the determinants of capital structure in Nepalese trading and manufacturing firms. The study has covered eleven major on-financial enterprises of trading and manufacturing firm’s specific variables. Firm’s size, growth opportunity, asset tangibility, profitability, firm’s age, liquidity and interest coverage ratio have selected as variables to examine their effect on corporate capital structure. The study used both descriptive and causal comparative research design to examine the determinants of capital structure. Data required for undertaking the study were collected from secondary sources. For each enterprise, financial data for 10 fiscal years covering the period of F/Y 2005/2006 to F/Y 2015/2016.The study concluded that asset tangibility, profitability, liquidity and interest coverage ratio are the major determinants of corporate capital structure in Nepalese trading and manufacturing firms.

Analyzing enterprise asset structure and profitability using cloud computing and strategic management accounting

“…Dhodary (2019) used descriptive and causal comparative research design to test the determinants of capital structure. The results reflected that asset tangibility, profitability, liquidity, and interest coverage were the main determinants of the capital structure of trade and manufacturing enterprises in Nepal [ 15 ]. Sumani et al (2020) tested the impact of capital structure and liquidity policy on enterprise governance and found that enterprise governance had a significant positive impact on capital structure.…”