Studying the Relation between Debt Ratio as a Representation of Capital Structure and Product Competitive Power in Market

Companies perform in a highly competitive environment. Research in the field of relation between capital structure and competitive power proved that optimal capital structure can increase the competitive power of a company in market. Moreover, increase in competitive power translates into more operational cash flow into the business unit and therefore decrease the need to borrow and ultimately improve the capital structure of the company. Consequently, capital structure and competitive power bear mutual influence. On the other hand, competitive power is the major determinant of success for a business and companies compete to increase the return on investment and stabilize their position in the market and outrun their competitors and rule the market. Because of importance of the consequences of the relation between these two measure this paper is about to study the relation between capital structure and competitive power of product.