This paper looks at financial performance of non-financial sectors of Pakistan
concerning capital structure. We gathered data from annual audited financial
statements of 152 firms listed at PSX during 2010-2017. To analyze data gathered, we have
employed descriptive, correlation and regression analyses techniques. The findings show
substantial positive contribution of LTDA in EPS and ROA and significant negative role in
NPM and ROE which implies prefer long term debt over short term debt because of less financing
cost. STDTA has substantial negative contribution in firms financial performance among all
sectors except sugar and communication & technology sectors. TDTA also has negative impact
on financial performance of firms among all sectors except automobile sector, which implies that
equity financing is preferable over debt financing. These findings validate pecking order theory
and recommend preferring internal financing (retained earnings) over external financing.
1-Hafiz Abdur Rashid PhD Scholar, Superior College, Lahore, Punjab, Pakistan.2-Ahmed Raza Bilal Associate Professor, Department of Business & Management Sciences, Superior College, Lahore, Punjab, Pakistan.
Capital Structure, Financial Performance, Non-Financial Sector