The Impact of Debt Capacity on Firm’s Growth
American Journal of Scientific Research, Issue 59, 2012
7 Pages Posted: 3 Jun 2012
Date Written: June 3, 2012
This paper concerns with the financial choice of debt capacity as the source of capital and its impact on growth of the firm. This paper investigates the relationship of debt to asset ratio and market to book ratio. Simple liner regression is used between book leverage and Growth. Financial data of 53 non financial firms of last 8 years were selected from Karachi Stock Exchange100 Index. The result reveals a significant positive relation between the debt to asset ratio and market to book ratio. It shows that there is no negative impact of debt capacity on the firm’s growth.
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