Effect of Capital Structure on Firm Performance: Evidence from Ethiopian Farmers Coffee Cooperatives
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DOI:
https://doi.org/10.59022/ijmf.123Keywords:
Return on Asset, Return on Equity, Fixed Effect Model, Random Effect Model, Capital StructureAbstract
This paper examined the empirical relationship between capital structure and firm performance using balanced panel data of nine primary farmers coffee cooperatives in Guji zone, Oromia regional state during 2020-2023. The profitability measured by return on asset indicated that short term debt to asset has positively significant relationship; total debt to equity has insignificant relationship, total debt to asset & total equity to asset have positively significant relationship with return on asset. The control variables Size & Asset tangibility has insignificant relationship, Asset utilization efficiency (current asset turnover has insignificant relationship, fixed asset turnover has positively significant relationship, total asset turnover has insignificant relationship)& liquidity have insignificant relationship with return on asset. Likewise, the profitability measured by return on equity showed that short term debt to asset has insignificant relationship, total debt to equity has negatively significant relationship.
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