Impact Of Capital Structure On Profitability Of Itc Limited

Abstract

Capital Structure Plays A Vital Role In Determining A Company’s Financial Stability And Long-term Profitability. The Mix Of Debt And Equity Used To Finance Business Operations Directly Influences Risk, Return, And Shareholder Value. This Study Examines The Impact Of Capital Structure On The Profitability Of ITC Ltd., One Of India’s Leading Diversified Conglomerates With A Strong Presence In FMCG, Hotels, Paperboards, Packaging, And Agri-business. The Primary Objective Of This Research Is To Analyse How Variations In Debt-equity Composition Affect Key Profitability Indicators Such As Return On Equity (ROE), Return On Assets (ROA), Net Profit Margin, And Earnings Per Share (EPS). The Study Is Based On Secondary Data Collected From The Annual Reports Of ITC Ltd., Financial Statements, And Relevant Financial Databases Over A Selected Period. The Findings Indicate That ITC Ltd. Has Traditionally Maintained A Conservative Capital Structure With Minimal Reliance On External Debt. This Low Leverage Strategy Has Contributed To Financial Stability And Consistent Profitability, While Reducing Financial Risk. However, The Study Also Explores Whether Optimal Utilization Of Debt Could Potentially Enhance Shareholder Returns Without Significantly Increasing Financial Distress. The Case Of ITC Ltd. Highlights How Strategic Financial Management Supports Long-term Value Creation While Preserving Financial Flexibility.

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