This study investigates the impact of FL on FP of textile sector (spinning, composite and weaving) of Pakistan considering the micro panel data of 56 firms over the period of 2011-2016. The study used FL as predictor measured by Debt to Equity Ratio (DER), Interest Coverage Ratio (ICR) and Total Debt to Total Assets Ratio (TDTAR) while FP as dependent variable measured by Earnings per Share (EPS), Net Profit Margin (NPM) and Return on Capital Employed (ROCE). Assets Tangibility (AT), Growth (G), Size (S) and Age (A) used as control variable. Based on the recommendations of Hausman test fixed and random effect in utilized. Outcomes of the study reveal mix results in selected textile sectors FP. In spinning sector ICR positively relate with EPS, NPM and ROCE. DER positively relates with NPM and negatively relate with EPS and ROCE.TDTAR negatively relate with EPS, NPM and positively relate with ROCE. In composite sector ICR negatively pertain with EPS, NPM and positively with ROCE. DER positively pertains with NPM and negatively with EPS and ROCE. TDTAR negatively relate with EPS, NPM and positively with ROCE. In weaving sector ICR show negative relationship with EPS, NPM and positive with ROCE. DER reveals negative relationship with EPS, NPM and positive with ROCE. TDTAR show positive relationship with EPPS, NPM and ROCE.
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