THE FINANCIAL STRUCTURE INFLUENCE ON NET PROFIT

Baciu (Boanta) Rodica – Bucharest University of Economic Studies, Department of Finance, Romania
Brezeanu Petre – Bucharest University of Economic Studies, Department of Finance, Romania
Adrian Simon – University of Medicine, Pharmacy, Science and Technology of Târgu Mureș, Romania

DOI: https://doi.org/10.31410/ERAZ.2019.207

5th International Conference – ERAZ 2019 – KNOWLEDGE BASED SUSTAINABLE DEVELOPMENT, Budapest – Hungary, May 23, 2019, CONFERENCE PROCEEDINGS

Published by: Association of Economists and Managers of the Balkans – Belgrade, Serbia
Conference partners: Faculty of Economics and Business, Mediterranean University, Montenegro; University of National and World Economy – Sofia, Bulgaria; Faculty of Commercial and Business Studies – Celje, Slovenia; Faculty of Applied Management, Economics and Finance – Belgrade, Serbia;

ISBN 978-86-80194-20-2, ISSN 2683-5568, DOI: https://doi.org/10.31410/ERAZ.2019

Abstract

Financial structure is one of the most complex areas of financial decision making due to
its interrelationship with other financial decisions variables. Decision related to financial structure
is important because it directly affects the profitability of the organization. The purpose of this paper
is to empirically examine the impact of capital structure on net profit for all companies active in the
wholesale of motor vehicle parts and accessories in Romania (NACE 4531), with extended financial
statements over a 10 years period from 2008 to 2017. In this study, the company’s financial structure,
which is the independent variable, is measured by financial leverage ratio. Net profit ratio (NPR) is
used as the dependent variable for the study. Used data has been analyzed by using regression analysis
to find out the links between variables. The output of the study may help to the entrepreneurs, board of
directors and policy makers to design better decisions in the debt-equity choice.

Key words

financial structure, net profit ratio, financial leverage ratio, profitability.

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