An Overview of Capital Structure of Tourism Companies Listed in Borsa Istanbul (BIST)

The optimal mix of capital structure has been an important task of managers in all corporations. A wrong decision may result in financial distress or bankruptcy. This is why analysis of capital structure is an important topic. As tourism plays a critical role in the Turkish economy, we examine the capital structure of tourism sector corporations traded in the Borsa Istanbul (BIST). We examine a sample of 11 tourism corporations. Based on the extracted data from the annual reports of corporations and the relevant databases, capital structure analysis is conducted. In addition, a performance analysis of price indices is carried out as a complement to the capital structure analysis. The findings of capital structure analysis reveal that the corporations in our sample have been financed mainly by equity. In addition, median values of total debt to total asset ratio for corporations in the sample range from 0.2 to 0.6. Median values of short-term debt to total debt ratio analysis reveal that Turkish tourism corporations prefer short-term debt financing to long-term ones due to the seasonality of tourism industry and unstable macroeconomic environment. The median values of annual interest coverage ratio also show that our sample corporations do not perform well financially to cover their debt obligations with their earnings before interest and tax (EBIT). The market index (XU100) and the tourism index follow the same trends but the up and down swings in the tourism index are relatively higher. Consequently, the tourism index is relatively more sensitive to the market conditions. Abnormal monthly returns analysis shows that tourism index has outperformed the market index in some periods while it has underperformed the market index in some other periods.