Determinants of capital structure Decision in Manufacturing PLCs: A case study of selected Manufacturing PLCs in Adama city

Abstract

Capital structure decisions are the most important and crucial decisions for any business because of their effect on the value and cost of the company. This research, conducted to examine the validity of theoretical factors that determine capital structure of private limited companies in Adama, Ethiopia. In order to achieve these objectives, eight explanatory variables; liquidity, tangibility, non-tax shields, growth, earning volatility, profitability, age and size of the firm regressed against the dependent variables of total debt ratio. The study was used Explanatory research design. For this purpose , a sample of 11 companies taken and secondary data collected from audited financial statements of selected companies for the period of five years (2002-2006EC). Stratified sampling design has employed and companies selected based on simple random sampling techniques to represent different industrial sectors (strata) within private limited companies. Data analyzed on quantitative basis using multivariable OLS regression.