Influence of Firms Profitability on Financial Leverage from Non-Financial Companies Listed at the Dar es Salaam Stock Exchange, Tanzania

Abstract

This research was mainly focused on evaluating the influence of firm’s profitability on financial leverage from non-financial listed firms at DSE. This research based on trade off theory. Eleven (11) non-financial companies from different industry listed in DSE were used. Panel data research design, and purposively sampling was used in the study. The study found that, it was show that profitability was adversely connected with financial leverage. This suggests that the engaged incomes and other current assets have mainly been paying to interior basis of money for purchasing original reserves. Consequently, businesses must rise income to guarantee them revenue more from their actions, as profit donates meaningfully to the financial leverage of firm.  The study concludes that profitability had significant influence on leverage of non-financial firms listed at DSE practice inside produced funds to support their reserves before choosing for outside funds. The study endorses that, supervisors should reimbursement consideration, cost-effectiveness and scope of their firms in the development plan of the association. Also consideration must be assumed on the ‘macroeconomic setting in which these companies were employed was vital to notifying their achievement and henceforth their combination of financial leverage.

Keywords: Dar es Salaam Stock Exchange, Financial Leverage, Profitability, Tanzania