Main Article Content
Abstract
A growing firm needs capital. This capital can come either from debt or equity. It is generally accepted that the optimal capital structure of a firm is the combination of debt and equity which ends in the minimum cost of capital. But the determination of an optimal capital structure is not an easy job. The company has to first analyze the important factors viz, the firm’s business risk, age, financial distress, liquidity, size, profitability, and growth rate before deciding upon an appropriate capital structure. The fluctuations in the financial markets during the past decade of liberalization have certainly made severe changes in the financial structure of corporate units. In the light of the empirical observations of various studies, the present research attempts to give clear idea on the determinants of the capital structure of Automobile industry in India in the post-liberalization decade. Based on the findings of the research, the owners of the company can avail the advantage of the capital structure by keeping debt at the proper volume. The findings of the study may also provide some sort of help to the investors in choosing a company which is capable of providing a better return for their investment.