Impact of capital structure on the financial performance of five-star hotel of Nepal : the Soaltee Kathmandu

Abstract

This study examines the impact of capital structure on financial performance of Five-Star Hotel of Nepal. This research is based on secondary data of Soaltee Hotel, five-Star Hotel of Nepal listed in NEPSE, during the period of 2017 to 2021. Information and data were gathered from the annual reports of the selected hotel. Correlation analysis and multiple regression analysis has been conducted considering Debt equity Ratio, Total debts to Total Assets Ratio and Shareholder equity Ratio were treated as independent variables, while Ratio on Asset, Ratio on Equity and Earning Per Share were considered dependent variables. Additionally, Firm Size was regarded as the control variable.

The findings of the study over the period of 2017 to 2021 revealed that debt equity ratio and total debt-total assets have significant impact on ratio on asset, but the analysis did not find any statistically significant impact of SER and the Firm Size on this variable. The significant impact of firm size and total debt-total asset has been seen on ratio on equity but debt equity ratio and shareholder´s equity ratio make no significant impact on it. No significant impact of total debt-total asset is observed on earning per share. However, debt equity ratio, shareholder´s earnings ratio and firm size has significant impact on earnings per share.