Impacts of Debt Financing on Financial Performance of listed Engineering Industry in Dhaka Stock Exchange

Abstract

Debt financing decision is the most important financial decision for a Firm. Debt financing has a long-term impact on the financial performance. Debt financing used as an instrument of filling the budget deficits of a firm. Now every firm report their debt financing in the two ways, short term debt (STD), long term debt (LTD). Explaining the impacts of debt financing helps to answer some financial question 1. establish the relationship between debt financing and financial performance of selected firms. 2.determine the impact of short debt ratio on financial performance of a firm.3. determine the impact of long-term debt ratio on financial performance of a firm. For the purpose of this study I take 27 firms with the debt in their capital structure. I determine two independent variables; they include Short term debt ratio (STDR) and Long-term debt ratio (LTDR). There are four dependent variables determine: they include Profitability analysis, Liquidity analysis, Return on Equity (ROE) analysis, Return on Asset (ROA) analysis. This study used secondary data from audited financial report of those firms between periods of 2016 – 2019. Descriptive statistics, correlation and regression analysis were used to analyze the data. Statistical Package for the Social Sciences (SPSS) software was used to analyze the data