Textile Industry In Pakistan

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Introduction: This research paper aims to find out the impact of capital structure on Pakistan’s textile firms profitability listed in Pakistan Stock Exchange (PSK) through different analysis by taking sample size of 20 textile firms and data for 10 years. We used secondary data to analyze the impact of capital structure on firm’s profitability. We have chosen the textile sector because it is considered the backbone of the Pakistan’s economy and its economy relies heavily on its textile sector. Experts feel that Pakistan has huge size textile industry competitive market and 60 to 70% of machines need replacement for the economic and quality production for a highly Capital structure decision plays very important role in terms of organization’s…show more content…
It has stronger impact on economy. Textile is the huge industrial sector of Pakistan. Pakistan is the fourth largest producer of cotton yarn and cloth in the world and ranks second in export of yarn and third in export of cloth. It generates the highest revenue by export of textile products of about 60% out of 100% as compared to other industrial sectors. It contributes with 8.5% to GDP and provides employment 39% to largely underutilized workforce. Pakistan’s textile industry Analysts are analyzed that Textile industry has been frequently expanded and increased in the cotton production since 1947.They have been indicated few points about expansion of textile industry as below; Cotton-bales increased from 1.1 million to 10 million Number of mills increased from 3 to…show more content…
A new company cannot collect sufficient funds as per their requirements as it has yet to establish its creditworthiness in the market; consequently they have to depend only on equity shares, which is the simple type of capital structure.After establishing its creditworthiness in the market, its capital structure gradually becomes complex. A complex capital structure pattern may be of following forms: i. Equity Shares and Debentures (i.e. long term debt including Bonds etc.), ii. Equity Shares and Preference Shares, iii. Equity Shares, Preference Shares and Debentures (i.e. long term debt including Bonds etc.). However, irrespective of the pattern of the capital structure, a firm must try to maximize the earnings per share for the equity shareholders and also the value of the firm. 1.5 Problem Statement: To know the individually effect of both debt and equity financing or equilibrium between debt and equity financing that which provides an optimal capital structure for the firm and increases its value as well. 1.6 Research Objectives: Research will try to find out some more gaps and extend the empirical work on capital structure in different textile companies of

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