Abstract:
Abstracts
Capital structure decisions are the most important decisions for any financial well-being of business. The general objective of the study is to investigate the determinants of capital structuretotal debt ratio of large manufacturing companies in Amhara region. To find answers to specobjective, seven explanatory variables profitability, tangibility, earning volatility, firm age, growthof assets, non-debt tax shields and liquidity of assets were regressed against the dependevariables of total debt ratio, purposive sampling was employed for conducting the studyQuantitative research approach with Explanatory research design has been used in the study. researcher take 17companiesand secondary data was collected for the audited financial statemof selected companies for the period of five years (2013-2017). Descriptive statistics, correlation,and regression analysis was used for the purpose of analyzing data by using stata software. multivariate regression analyses would be made to find answers for specific objectives.
The random regression result show that 51.3 % of the total debt ratio is explained by independent variables which is included in the model while, the remaining 48.7 changes in totadebt ratio are because of other factors that are not included in the model. The findings show tangibility, growth of assets, Non-debt tax shield, and liquidity of asset variables are the significandeterminants of capital structure of manufacturing companies in Amhara region. While age of firm, profitability, and earning variability is not significant at 5% significance level. These findingsare beneficial for manufacturing companies in deciding the financing decisions of the firm.
