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Choosing the appropriate mix of various short and long-term sources of funds, stands among ISSN 2162-3082 2017 the acute decisions to be taken by management of the firms to form elementary suitability for investment and other decisions. Literature is lacking in consensus pertinent to impact of capital structure on financial performance of the firms. This study intends to investigate the impact of capital structure on financial performance of fuel and energy sector of Pakistan taking into account secondary data from 2006-14. Empirical results of renowned econometric model multiple regression revealed that there is a significant negative impact of capital structure on ROA and ROE of firms in fuel & energy sector of Pakistan, while EPS is least driven by capital structure parameters, only the size has significant positive bearing on EPS. The research findings provide suggestions to policy makers and administrators to rely on equity financing rather debt ethos in order to mitigate the default risk exposure. International Journal of Accounting and Financial Reporting