Thi Thuy HOANG, Lien Thi HOANG, Thi KimThu PHI, Minh Thu NGUYEN, Minh Quang PHAN / Journal of Asian Finance, Economics and Business Vol 7 No 10 (2020) 803–810 803 803 Print ISSN: 2288-4637 / Online ISSN 2288-4645 doi:10.13106/jafeb.2020.vol7.no10.803 The Influence of the Debt Ratio and Enterprise Performance of Joint Stock Companies of Vietnam National Coal and Mineral Industries Holding Corp. Thi Thuy HOANG 1 , Lien Thi HOANG 2 , Thi KimThu PHI 3 , Minh Thu NGUYEN 4 , Minh Quang PHAN 5 Received: August 01, 2020 Revised: September 06, 2020 Accepted: September 10, 2020 Abstract: This objective of this study is to enrich the literature by the debt ratio and enterprise performance of Joint stock companies of Vietnam National Coal and Mineral Industries Holding Corporation Limited (Vinacomin). The debt ratio is an important index of capital structure, and it influences and decides the enterprise performance. Therefore, the determination of reasonable debt ratio level is beneficial to the stable operation of Vinacomin’s enterprises. Based on the research conclusion about the effect on capital structure of debt ratio from domestic and foreign scholar, collecting data from 2014-2018 of Vinacomin’s enterprises as a research sample, the article conducts research on the relationship between debt ratio and business performance of Vinacomin, as measured by return on total Assets. In addition, the study uses free cash flow, company size , growth opportunity, investment opportunities, operating costs to sales ratio as control variables.The study shows the debt ratio of Joint stock companies of Vietnam National Coal and Mineral Industries Holding Corporation Limited has a negative effect on the enterprise performance. Furthermore, the research results of the article are references for Vinacomin’ enterprises in the course of production and business activities, determining a reasonable debt ratio, and improving the operational performance of enterprises. Keywords: Capital Structure, Debt Ratio, Enterprise Performance, Vinacomin JEL Classification Code: G32, G39, L25, L71 capital requirement. There are many funding sources for the capital of enterprises such as: Owner’s equity capital, short term loan, long term loan. The capital structure has an impact on the business performance of the company, therefore the companies need to plan the structure of reasonable capital. According to the theory of Modigliani and Miler (1958), there does not exist an optimum capital structure for each enterprise, however the conclusion of Modigliani and Miler (1958) is not yet practical because of the issues arising from the conflict of representation within the business and other factors that affect the decision making on the structure of the corprate capital. Modigliani and Miler have pointed out that the aggregate impact of such factors such as taxation, and the cost of intermediate when using debt with opposite effects form the theory of optimum financial structure. When a company wishes to establish a long-term funding source, the loan cannot be ignored such as debt, isuing bonds (Dnaldson, 1961). According to the traditional concept of optimum capital structure, when the business borrowed, the proportion between debt and equity increased, forcing the owners to increase the return on shareholder’s requirement (i.e. 1. Introduction When the businesses conduct its operations, it requires capital to do so. All businesses must have capital in order to purchase assets and maintain their operations. The enterprises must arrange the appropriate funding for the 1 First Author and Corresponding Author. Hanoi University of Mining and Geology, VietNam [Postal Address: No.18 Vien Street – Duc Thang Ward, Bac Tu Liem District, Ha Noi, 100000, Vietnam] Email: thuyhumg.hoang@gmail.com 2 Hanoi University of Pharmacy, Viet Nam. Email: Lienht88@gmail.com 3 Hanoi University of Mining and Geology, VietNam. Email: phithikimthu2011@gmail.com 4 PhD Student, Hanoi University of Mining and Geology, VietNam. Email: nguyenthu2012@gmail.com 5 Lecturer, Hanoi University of Mining and Geology, VietNam. Email: Phanminhquang061290@gmail.com © Copyright: The Author(s) This is an Open Access article distributed under the terms of the Creative Commons Attribution Non-Commercial License (https://creativecommons.org/licenses/by-nc/4.0/) which permits unrestricted non-commercial use, distribution, and reproduction in any medium, provided the original work is properly cited.