Empirical Research on the Influence of Capital Structure on Profitability Based on Data from the Pharmaceutical Industry

Pharmaceutical industry develops rapidly in both domestic and international markets as a profitable business. In this paper, the relationship between capital structure and profitability of listed company in the pharmaceutical industry is under discussion. In the context, we select 141 pharmaceutical industry listed companies as the research objects. Through the model and principal component analysis, we use the total score to assess profitability, then adopt multiple regression method for regression analysis. The research result shows: asset-liability ratio of listed companies is negatively correlated with the profitability in the pharmaceutical industry. The relationship between long-term asset-liability ratio and profitability is not significant. The proportion of professional major shareholders and profitability is related. Ownership concentration is positively associated with profitability. The consequence is probably conducive to regulate financing behavior in China and boost the competitiveness of enterprises. Some suggestions are submitted which help to improve listed company's ability in China's pharmaceutical industry to fight against risk. In addition, we hope it provides theoretical help for investors and other important stakeholders to make decisions. Therefore, the study of the relationship between capital structure and profitability appears to be of great significance for Chinese pharmaceutical listed companies.