Capital is an important and critical resource for all companies. Under the capital structure, a company has to determine the proportion in which capital should be raised from different securities.  A capital structure or a combination of owned capital and debt which enables to maximize the value of the firm is called optimum capital structure. The main objective of this paper is to find out present practices of capital structure adopted by service companies in India and to find out the relationship between capital structure and financial performance of service companies taken as sample during the study period. For achieving the objective of the study data has been collected from Prowess software from 2005-2017 and 196 service companies has been taken. For analysis purpose, data is processed through SPSS software by using multiple regression models. Different capital structure and financial performance variables has been used i.e. Long term Debt to capital, Short term debt to capital, Total debt to total capital, Total debt to equity, Return on Equity, Return on assets, Earnings per share, Tobin’s Q, Firm Size and Assets Growth. The findings of the study reveal that most of the companies were using the Debt in their capital structure as per ideal standard and also all variables of capital structure have a significant relationship with financial performance ratio.

KEYWORDS:  Capital Structure, Financial Performance, Tobin’s Q, SPSS.