Purpose – This paper seeks to investigate the relationship between capital structure andprofitability of listed firms on the Ghana Stock Exchange (GSE) during a five-year period.Design/methodology/approach – Regression analysis is used in the estimation of functionsrelating the return on equity (ROE) with measures of capital structure.Findings – The results reveal a significantly positive relation between the ratio of short-term debt tototal assets and ROE. However, a negative relationship between the ratio of long-term debt to totalassets and ROE was found. With regard to the relationship between total debt and return rates, theresults show a significantly positive association between the ratio of total debt to total assets andreturn on equity.Originality/value – The research suggests that profitable firms depend more on debt as their mainfinancing option. In the Ghanaian case, a high proportion (85 percent) of the debt is represented inshort-term debt.