![]() On the other hand, the debt ratio was found to have a negative relationship with profitability. The findings show that the equity and debt to equity ratios have significant positive relationships with both profitability metrics. Regression analysis is used to estimate functions thatrelate return on assets (ROA) and return on equity (ROE) to capital structure measures such as debt ratio, equity ratio, and debt to equity ratio. The study samples 1106 SMEs that have been in operation for five years or less and are registered with the Ghana Enterprises Agency. This paper investigates the relationship between capital structureand profitability of nascent small and medium enterprises in Ghana. When small businesses are profitable, their staying power is enhanced. The importance of small and medium enterprises cannot be overstated however, most of them fail in their early stages. ![]()
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