Liquidity and Capital Structure: Evidence from Sri Lanka

Abstract

In the corporate finance, the decision on the capital structure and its components is viewed as one of the most extensively researched area. In this context, researchers carried out the study on liquidity and capital structure in the Sri Lanka telecom Plc. Data on the Liquidity and Capital structure from the year 2005 to 2011 were collected for the study purpose. Regression analysis was used to answer the research question as what extent the Liquidity influences on the Capital Structure of the Sri Lanka Telecom Plc. Findings reveled that, the decision making on the liquidity management of the Sri Lanka Telecom Plc. Due to that, the firm should focus on the liquidity management to take the decision on the capital structure which should lead to the firm value in the long term perspective.