Capital Structure Case Study

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CHAPTER 1: INTRODUCTION The main objective of this study is to investigate the impact of capital structure and other variable that influence the performance of Government Linked Companies which are listed on Bursa Malaysia. This chapter intends to introduce the background of study, problem statement, objectives of the research, research question, hypothesis, significance of study, scope of study and limitation of the study. 1.1 BACKGROUND OF STUDY The performance of the company is measured by its financial performance, which is it help a company to measure on how an organization can use their assets efficiently in order to generate income. Financial performance can be measured by profitability and liquidity as a tool that valuable for the…show more content…
Previous researchers come out with many arguments on the correlation of both which is some found negative and positive relationship. The capital structure is a mixture of debt and equity, which is important for a company to make its financial decision. San (2011) stated that capital structure refers to how firm finance their assets by the combination of debt, equity, or hybrid securities. Therefore, it can be concluded that capital structure is a mixture of company equity, company short term debt and long term debt and preferred equity. It describes how the company would raise capital in order to expand their business activities. It is important for the company to finance its business activity in order to support their fixed asset and net working capital. Therefore the decision on capital structure would affect the profitability of a firm since it affected by the capital management…show more content…
This study will help the manager of a company to make financial decisions for their company and it also would be beneficial to the Government Linked Companies’s investors and management in making clear decisions on capital structure. On the other hand, this research would help investors to recognize the relationship between capital structure and financial performance and choosing appropriate measures to evaluate and analyze the companies’ financial status in order to gain knowledge of success of management in applying their

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