The real estate industry is capital intensive and characterised by extensive use of debt financing. The relationship between leverage and profitability within the industry is therefore particularly interesting to examine. This study analyzes the relationship between leverage and profitability in Swedish listed real estate firms during the period 2014-2024, when multiple geopolitical conflicts occurred. The analysis focuses on how this relationship differs across the periods before, during and after the Covid-19 pandemic.

Adopting a quantitative and deductive approach, the study utilizes secondary data obtained from Retriever Business. The sample consists of 32 Swedish listed real estate firms. Profitability is measured using Return on Assets (ROA), while leverage is operationalized using debt ratio. The empirical material is analyzed using descriptive statistics, Spearman’s rank correlation, multicollinearity test, VIF tests and regression analysis. 

The results show a statistically significant negative relationship between debt ratio and profitability. This means that firms with higher profitability tend to show lower leverage. Furthermore the results indicate that this relationship varies between the periods before, during and after Covid-19. The findings of the study can be linked to the Pecking Order theory, as more profitable companies tend to finance their operations using internal funds rather than external debt financing. In conclusion, the study shows that debt ratio is a relevant factor for understanding profitability in Swedish listed real estate companies.