Introduction
One of the key choices that businesses must make in order to maximize their profits and remain competitive is their capital structure. Pewter claims that a capital structure is a combination of debt and equity that organizations employ to fund their commitments. Proposals that minimize capital expenses and maximize earnings per share are addressed by wise capital structure choices. On the other hand, inappropriate capital structure decisions can lower shareholder returns and raise the cost of capital. Thus, managers ought to select the optimal capital structure combination to boost businesses' revenue and lower the costs associated with their commitments (Wu et al., 2023).
Since Modigliani and Miller first claimed in their thesis in 1958 that there is no connection between a company's capital structure and its value in a perfect market, the question of how capital structure impacts a company's performance has been regarded as one of the most difficult financial topics to discuss. Since the factors that define the capital structure vary by industry and can provide varied results depending on the industry type, geographic environment, etc., no firm conclusion has been established as of yet. It is undoubtedly pointless to look at the capital structures of various industries and analyze the outcomes. It isn't, and since the tourism sector is one that can have a big impact on the nation's economy and the country's population, business success, and regional development, it makes sense to pay attention to it and work to increase its profitability. Talking about hotels, their growth, and their management and operations is one of the most important services in the travel and tourism sector. Due to its numerous tourist attractions, Yazd draws a large number of visitors each year from all around Iran and the world.
Since their hotel stay is regarded as one of the crucial difficulties, we made the decision to look at how Yazd City's hotels' capital structure affects their financial performance.
Is there a connection between Yazd hotels' profitability performance and their financial structure and other features?
 
Methodology
The current study was conducted using the library and post-event technique, and it is applied in terms of purpose and correlational in terms of descriptive approach. This study was carried out using the panel econometric model. The main hotels in Yazd city from 1394 to 1399 make up the statistical population of this study. Eleven well-known hotels in Yazd City provided financial data for this study.
 
Results
First, we discovered that the current ratio, financial stability coefficient, total asset turnover, and accounts receivable turnover all significantly and favourably correlated with asset return. This implies that raising these factors may result in better profitability performance and larger asset returns. The liquidity ratio, current asset turnover, coverage ratio, cost ratio, and gross profit margin, on the other hand, were found to have a strong and negative association with asset return. Furthermore, this analysis found no connection between crises and asset returns. Return on equity was found to be positively and significantly correlated with the current ratio, financial stability coefficient, and turnover of total assets. Conversely, a substantial and adverse correlation was noted between return on equity and the gross profit margin, coverage ratio, expense ratio, and liquidity ratio. Return on equity did not, however, correlate with the debt ratio, current asset turnover, accounts receivable turnover, or crises.
 
Discussion and Conclusion
The findings are crucial to any research project since they serve as the foundation for inferences, problem-solving, and guiding the current state of affairs in the right direction. The study's findings give hotel managers important information to consider when deciding on capital structure. The findings of the current study are consistent with those of Karanavij et al.'s (2019) study, which demonstrated a significant relationship between the liquidity ratio, financial stability coefficient, coverage ratio and gross profit margin, cost-to-income ratio, and total asset turnover with ROA. The fact that the majority of the hotels under investigation had negative operating profits in 2019 could be one factor contributing to the lack of a correlation between profitability and crisis in this study. Nevertheless, their net profit ended up being positive because of the rise in capital brought about by the sale of fixed assets. Return on assets was calculated using net profit in this study so that the issue could have an impact on the findings. Future study may benefit from taking note of this fact and calculating ROA and ROE using net profit. The variables and statistics population of the current study are different from those of domestic research.
Funding
There is no funding support.
Authors’ Contribution
Authors contributed equally to the conceptualization and writing of the article. All of the authors approved the content of the manuscript and agreed on all aspects of the work declaration of competing interest none.
 
Conflict of Interest
The authors state that there is no conflict of interest in any part of this research.
 
Acknowledgments
The efforts of all the authors and those who guided them are appreciated and thanked.