The Impact of Financial Financing Structure in Profitability Indicators in the Iraqi Industrial Sector

Abstract

The study aims to examine the correlational relationship and impact between the capital structure and profitability indicators in Iraqi industrial companies. It also explores the changes in the capital structure and their implications on market value, and provides necessary solutions to enhance the Iraqi industrial sector and protect local products. To achieve these objectives, the Iraqi industrial sector was selected as the study sample, consisting of a selected sample of 13 Iraqi companies from the total population, disregarding 3 companies due to production cessation and financial constraints. Therefore, the sample represents approximately 81% of the total sample population. A total of 450 questionnaires were distributed, and 431 were retrieved. After sorting and collecting the questionnaires for analysis, it was found that 10 questionnaires were invalid, resulting in a total of 421 valid questionnaires for analysis. After delving into the theoretical and practical aspects of the research, the study found a statistically significant correlation between short-term capital structure and profitability indicators, characterized by strength with a value of 0.632, significant at a level lower than 0.05. Similarly, there is a correlation between long-term capital structure and profitability indicators, characterized by a moderate strength with a value of 0.593, significant at a level lower than 0.05. Additionally, there is a correlation between the capital structure of equity and capital and profitability indicators, characterized by a moderate strength with a value of 0.653, significant at a level lower than 0.05. The results indicate that the financial capital structure explains approximately 0.55 of the observed variations in profitability indicators.