Inderscience Publishers

Financial management practices of public sector enterprises in India: capital structure decisions and risk considerations

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Courtesy of Inderscience Publishers

The major findings of the study are that most public sector enterprises (PSEs) in India have a debt dominated capital structure and a sizeable number of PSEs are beset with the risk of unserviceable debt. Therefore, it is suggested that viable PSEs should refrain from the excessive use of debt, on the one hand, and that the government, while restructuring the struggling PSEs, should formulate their financial restructuring schemes in such a manner as to enable them to operate with balanced D/E ratios, on the other.

Keywords: business risk, capital structure ratios, debt–equity ratio, financial restructuring, financial risk, flexible instruments, interest coverage ratio, shareholders funds, debt–total assets ratio, total risk, financial management, public sector, India, risk management, unserviceable debt

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