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In Pakistan

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In Pakistan, debt plays a vital role in business for it a great source of funds for both of its long term and short term needs. The weight of using debt as capital is gradually increasing as years pass by. It is though affected by the size, profitability and capital intensity of the firms in the industry of textile. The management of these companies must also keep view of the risk factors associated with using debt as capital for the overall value of the firm. Moreover, as a result, textile companies may well increase their capital intensity and improve quality but getting the right manner of financing for this purpose becomes noteworthy, because if the right method is not selected it might show counter productivity and might adversely distress the position of the firm. Large sized firms are in a place to generate both internal and external sources of financing. Hence, they have the opportunity to decrease the debt which would result in a better market standing, firm value and share prices. Profitable firms can grow in size by generating internal sources of financing, yet they have to be careful in the choice of funding as it affects their market standing and share price

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