Capital Structure and Profitability: Australian Petroleum Industry

This report examines the impact of capital structure on the profitability of the Australian petroleum industry. It begins by outlining the research questions, which focus on how capital structure affects return on equity and the overall profitability of firms in the sector. The research methodology includes the use of secondary data from sources like Yahoo Finance, Bloomberg, and Morningstar, along with the annual reports of selected companies such as Woodside Petroleum Limited and Origin Energy Limited. The report also highlights the use of peer-reviewed scholarly articles to support the analysis, focusing on the relationship between capital structure ratios, return on equity, and return on assets. The report aims to provide insights into how different capital structures influence the financial performance and long-term sustainability of firms within the Australian petroleum industry, contributing to a deeper understanding of financial management within this sector.

Running head: IMPACT OF CAPITAL STRUCTURE ON PROFITABILITY
Impact of Capital Structure on Profitability of the Australian Petroleum Industry
Name of the Student:
Name of the University:
Author’s Note:
Course ID:

1IMPACT OF CAPITAL STRUCTURE ON PROFITABILITY
Table of Contents
Statement depicting field of research:.............................................................................................2
Source of secondary data:................................................................................................................2
Research questions:.........................................................................................................................2
Search terms:...................................................................................................................................2
Three peer-reviewed scholarly articles:...........................................................................................3
References:......................................................................................................................................4
Appendix:........................................................................................................................................5

2IMPACT OF CAPITAL STRUCTURE ON PROFITABILITY
Statement depicting field of research:
The proposed research will be aiming to analyse the effect of capital structure on
profitability of the petroleum industry in Australia. The rate of return of an organisation is
affected by the capital structure for the shareholders as well as survival in opposition to
economic downturns. Therefore, capital structure plays a pivotal role in growth and survival of a
firm, as it has impact on profitability in terms of long-term objectives.
Source of secondary data:
In this research, some of the leading firms in the Australian petroleum sector will be
selected to know about the impact of capital structure on the organisations. The names of the
organisation that will be selected are mentioned in Appendix. The industry data will be extracted
from Yahoo Finance, Bloomberg and Morningstar for the past five years. In addition, the annual
reports of the chosen organisations will be selected as well to enhance the quality of the research.
Another link that will be useful for the research is “https://www.energy.gov.au/government-
priorities/energy-data/australian-petroleum-statistics”. Therefore, quantitative data analysis will
be useful to conduct the overall research.
Research questions:
 How does capital structure affect the return on equity and return on equity of the
Australian petroleum industry?
 What role does capital structure play in the profitability of the firms operating in the
petroleum sector of Australia?
Search terms:
The search terms to be used in this research will include the following:
 Capital structure
 Profitability
 Debt
 Equity

3IMPACT OF CAPITAL STRUCTURE ON PROFITABILITY
 Return on equity
 Return on assets
 Australian Petroleum Industry
Three peer-reviewed scholarly articles:
The reference list section highlights the three articles to be selected for this research, as
they examine the methods by which capital structure affects the profitability of the organisations.
Along with this, the articles will focus on representing an association between capital structure
ratios and return on equity and return on assets by taking into account both current and non-debt
debt and equity.

4IMPACT OF CAPITAL STRUCTURE ON PROFITABILITY
References:
Chechet, I. L., & Olayiwola, A. B. (2014). Capital structure and profitability of Nigerian quoted
firms: The agency cost theory perspective. American International Journal of Social
Science, 3(1), 139-158.
Kodongo, O., Mokoaleli-Mokoteli, T., & Maina, L. N. (2015). Capital structure, profitability and
firm value: panel evidence of listed firms in Kenya. African Finance Journal, 17(1), 1-
20.
Tailab, M. M. K. (2014). The effect of capital structure on profitability of energy American
firms. International Journal of Business and Management Invention, 3(12), 54-61.

5IMPACT OF CAPITAL STRUCTURE ON PROFITABILITY
Appendix:
Companies that will be selected for this research include the following:
1. Woodside Petroleum Limited
2. Origin Energy Limited
3. Oil Search Limited
4. Caltex Australia Limited
5. Santos Limited
6. Washington H Soul Pattinson and Company Limited
7. Beach Energy Limited
8. BHP Billiton
9. Rio Tinto
10. Awe Limited
11. Paladin Energy Limited
12. Horizon Oil Limited
13. Austex Oil Limited
14. Cooper Energy Limited
15. Jupiter Energy Limited