ABSTRACT: Capital structure is the proportion or each type of capital debt and equity used by a business organisation. Many organizations employ debt in their capital structure because of its benefits. One of the benefits is that interest on debt is tax deductible and reduces tax liability of the organizations concerned. Furthermore, failure to pay interest commitment can result to financial backwardness. The financial managers consider so many factors in their capital structure decisions because of the implications in the use of debt. The factors are cost of capital, debt capacity cash flow. Etc.The primary aim of business organisation is to make maximum profit if possible. The researcher made a study of selected quoted manufacturing and oil servicing companies to see how capital structure related to profitability of business organizations. Five companies were selected and their financial statements for four years extracted and analyzed. The analysis showed that there is a strong relationship between capital structure and profitability between debt equity ration and shareholders’ return. It means that the cost of debt in the companies put together is less than their return on investment. A company having return on investment greater than cost of debt will have an increasing shareholders’ return.
PROJECT PROPOSAL
This research will be based on an evaluation of capital structure and profitability of business organisation. The capital structure is the long-term capital requirement of the company which shows how the firm will be finance. And how the profitability of this company will be determined whether it will remain in business or not especially in the long-run. In the course of doing this we will bring about the problems that will crises, the significance, objective of the study and the limited and the scope of the study. Chapter two will deal with the collection of information from companies and textbooks i.e. (secondary source of data). This will aid to develop our question for developing of chapter three. Chapter three will define the research methodology and sources of data used which can be with questionnaire or interviews method. This will help us to acquire information from field works ie our case study. Chapter four will deal with the presentation, analyzing and interpretation of data by using the sample size to determine the population to conduct research. Chapter five will deal with the conclusion, summary and the recommendation including the bibliography.
TABLE OF CONTENT
CHAPTER ONE: INTRODUCTION
1.1 Background of the study
1.2 Statement of the problem
1.3 Objective of the study
1.4 Significance of the study
1.5 Scope and limitation of the study
1.6 Research hypothesis
1.7 Definition of terms
Reference
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