The effect of financial leverage usage on profitability: An application in the BIST cement sector

Companies need sustainable and profitable growth in the future to ensure their superiority and existence. Companies targeting sustainable profitable growth seek to optimally design capital structures based on strategic, operational and tactical decisions. The effect of optimal capital structure and capital structure on profitability is the most discussed subject of finance literature in about 60 years. The fact that there are so many factors affecting profitability makes the literature a rich, up-to-date and productive structure. All these studies are valuable resources that can be guide to financial managers' decisions. In this study, the financial tables of 18 companies operating in the stock exchange Istanbul (BIST) cement sector between 2009-2016 were examined and the effect of capital structure on profitability was investigated. Return on Equity (ROE) and Return on Assets (ROA) are dependent variables; long-term debts and total debts are independent variables, and firm size and non-debt tax shields are used as independent (control) variables. The data were analyzed in econometrics program using the panel data method.