Relationship between Capital Structure and Operating Profit- A Study on the Companies of the Indian Oil and Gas Sector.

Abstract

Capital structure is the proportion between Owner’s funds and Borrowed funds, whereas operating profit represents the profits from business operations. The present study attempts to analyze the relationship between the capital structure represented by debt equity and the operating profit of ONGC, Oil India and PETRONET LNG- the companies in the Petroleum Industry. This industry, also known as the Oil Industry, includes global exploration, extraction, refining, and transportation processes. Fuel oil and gasoline (petrol) are the two biggest volume products.

The data for the study is secondary and has been taken from the Capitaline database. The findings of this study reveal that for the above companies, there is no relationship between the capital structure, expressed as debt to equity and the operating profit ratio.