The relationship between debt structure and financial performance in state-owned enterprises

This study aims to examine the relationship between the debt structures and financial performance of Turkey's strategic State Economic Enterprises (SEEs), namely the Turkish State Railways (TCDD), the General Directorate of Tea Enterprises (ÇAYKUR), the State Supply Office (DMO), the Electricity Generation Company (EÜAŞ), and the Turkish Coal Enterprises (TKİ). Within the scope of the research, financial data were obtained from the balance sheets and income statements included in the activity reports published on the official websites of the selected enterprises for the years 2018–2022. Through these data, debt structures were analyzed and financial performance indicators, namely Return on Assets (ROA) and Return on Equity (ROE), were calculated to evaluate the financial status of the enterprises. Panel data analysis, one of the quantitative analysis methods, was used as the research method. This method allows for a more in-depth examination of changes in the debt levels and profitability ratios of enterprises over the years by combining both time series and cross-sectional data. Debt ratios were calculated using Excel software, and the trends of ROA and ROE ratios over time were analyzed. The universe of the research consists of state economic enterprises operating in Turkey, and the sample includes TCDD, ÇAYKUR, DMO, EÜAŞ, and TKİ. A comparative analysis was conducted in terms of these enterprises' debt policies, financial sustainability, and capacities to provide public services. The findings of the research aim to reveal how effective debt management shapes the financial performance of SEEs. When the panel data analysis results are examined, it is observed that the Financial Risk Indicator (FRG) variable has a statistically significant and negative effect on both ROA and ROE. Moreover, the debt ratio was found to have a positive effect on ROE, indicating that the financial leverage effect can increase returns at the enterprise level. However, the variables of Short-Term Financing Ratio (KVFO) and Equity Ratio (OSO) were not found to have statistically significant effects on either ROA or ROE. As a result, it is concluded that SEEs should evaluate their debt structures not only in terms of quantity but also based on their components. Creating a more balanced debt composition by avoiding short-term and risky debts emerges as a critical factor for sustainable profitability.