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Rapport Between Leverage and Profitability: A Study of TVS Motor Company

Received: 12 March 2018     Accepted: 9 April 2018     Published: 11 May 2018
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Abstract

Leverage analysis can be defined as a process of identifying the financial strength and weakness of a firm from the available data and financial statements. A firm needs funds so run and manage its activities. The funds are needed to set up an enterprise and then to implement expansion, diversification and other plans. A decision has to be made regarding the composition of funds. In this paper an attempt has been made to analyze the impact of leverage on the profitability and performance of the company. For the purpose of the study TVS motor Co. has been selected and for analysis purpose the basic statistical tools like Mean, SD, CV, CAGR, ANOVA(one way) have been used and in order to measure the impact the OLS simple Linear regression model has been used, the study covers a period of ten years from 2006 to 2016. Results suggested that the operating, financial and combined leverage of the company does not play any major role in making investment decisions of the company. And it was also found that the financial, operating and combined leverage of the company has no significant impact on ROA (Return on Assets) and Risk Adjusted (SHROA) of the company.

Published in Journal of Finance and Accounting (Volume 6, Issue 2)
DOI 10.11648/j.jfa.20180602.11
Page(s) 49-55
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2018. Published by Science Publishing Group

Keywords

Roa, Shroa, Liquidity, Leverage & Risk

References
[1] Alkhatib, K. (2012). The Determinants of Leverage of Listed Companies. International Journal of Business and Social Science, 3(24), 65-73.
[2] Baggs, J., & James, A. (2005). Trade Liberalization, Profitability and Financial Leverage. Analytical Studies Branch Research Paper Series, 24(2), 3rd ser., 283-287.
[3] Fengju, X., Fard, Y. R., Mehar, G. L., &Akhteghan, N. (2013). The Relationship Between Financial Leverage and Profitability with an emphasis on Income Smoothing in Iran’s Capital Market. European Online Journal of Natural and Social Sciences, 2(3), s, 154-164.
[4] Gupta, S. K., & Sharma, R. K. (2011). Financial Management. Delhi: Kalyani Publisher.
[5] Javed, H. Z., Rao, H., Akram, B., &Nazir, F. M. (2015). Effect of Financial Leverage on Performance of the Firm: Empirical Evidence from Pakistan. SPOUDAI Journal of Economics and Business, 64(1), 2nd ser., 87-95.
[6] Khan, M. K., & Jain, P. K. (2010). Financial Management. Delhi, Delhi: TataMegraw – Hill Publishing Company Ltd.
[7] Khedkar, B. E. (2015). A Study of Leverage Analysis and Profitability for Dr Reddy’s Laboratories. International Journal of Research in Engineering and Social Sciences, 5(5), 93-97.
[8] Maheswari, S. N. (2009). Management Accounting and FinancialControl. Delhi: Sultan Chand & Sons
[9] Ojo, S. K. (2012). The Effect of Financial Leverage on Corporate Performance of Some Selected Companies in Nigeria. Canadian Social Science, 8(1), 85-91.
[10] Reddy, T. S., Parasad, H., & Reddy, Y. (2010). ManagementAccounting. Chennai: Margam Publications.
Cite This Article
  • APA Style

    Gautam Sen, Ravi Ranjan. (2018). Rapport Between Leverage and Profitability: A Study of TVS Motor Company. Journal of Finance and Accounting, 6(2), 49-55. https://doi.org/10.11648/j.jfa.20180602.11

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    ACS Style

    Gautam Sen; Ravi Ranjan. Rapport Between Leverage and Profitability: A Study of TVS Motor Company. J. Finance Account. 2018, 6(2), 49-55. doi: 10.11648/j.jfa.20180602.11

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    AMA Style

    Gautam Sen, Ravi Ranjan. Rapport Between Leverage and Profitability: A Study of TVS Motor Company. J Finance Account. 2018;6(2):49-55. doi: 10.11648/j.jfa.20180602.11

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  • @article{10.11648/j.jfa.20180602.11,
      author = {Gautam Sen and Ravi Ranjan},
      title = {Rapport Between Leverage and Profitability: A Study of TVS Motor Company},
      journal = {Journal of Finance and Accounting},
      volume = {6},
      number = {2},
      pages = {49-55},
      doi = {10.11648/j.jfa.20180602.11},
      url = {https://doi.org/10.11648/j.jfa.20180602.11},
      eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jfa.20180602.11},
      abstract = {Leverage analysis can be defined as a process of identifying the financial strength and weakness of a firm from the available data and financial statements. A firm needs funds so run and manage its activities. The funds are needed to set up an enterprise and then to implement expansion, diversification and other plans. A decision has to be made regarding the composition of funds. In this paper an attempt has been made to analyze the impact of leverage on the profitability and performance of the company. For the purpose of the study TVS motor Co. has been selected and for analysis purpose the basic statistical tools like Mean, SD, CV, CAGR, ANOVA(one way) have been used and in order to measure the impact the OLS simple Linear regression model has been used, the study covers a period of ten years from 2006 to 2016. Results suggested that the operating, financial and combined leverage of the company does not play any major role in making investment decisions of the company. And it was also found that the financial, operating and combined leverage of the company has no significant impact on ROA (Return on Assets) and Risk Adjusted (SHROA) of the company.},
     year = {2018}
    }
    

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  • TY  - JOUR
    T1  - Rapport Between Leverage and Profitability: A Study of TVS Motor Company
    AU  - Gautam Sen
    AU  - Ravi Ranjan
    Y1  - 2018/05/11
    PY  - 2018
    N1  - https://doi.org/10.11648/j.jfa.20180602.11
    DO  - 10.11648/j.jfa.20180602.11
    T2  - Journal of Finance and Accounting
    JF  - Journal of Finance and Accounting
    JO  - Journal of Finance and Accounting
    SP  - 49
    EP  - 55
    PB  - Science Publishing Group
    SN  - 2330-7323
    UR  - https://doi.org/10.11648/j.jfa.20180602.11
    AB  - Leverage analysis can be defined as a process of identifying the financial strength and weakness of a firm from the available data and financial statements. A firm needs funds so run and manage its activities. The funds are needed to set up an enterprise and then to implement expansion, diversification and other plans. A decision has to be made regarding the composition of funds. In this paper an attempt has been made to analyze the impact of leverage on the profitability and performance of the company. For the purpose of the study TVS motor Co. has been selected and for analysis purpose the basic statistical tools like Mean, SD, CV, CAGR, ANOVA(one way) have been used and in order to measure the impact the OLS simple Linear regression model has been used, the study covers a period of ten years from 2006 to 2016. Results suggested that the operating, financial and combined leverage of the company does not play any major role in making investment decisions of the company. And it was also found that the financial, operating and combined leverage of the company has no significant impact on ROA (Return on Assets) and Risk Adjusted (SHROA) of the company.
    VL  - 6
    IS  - 2
    ER  - 

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Author Information
  • Department of Commerce,Assam Don Bosco University,Guwahati, India

  • Amity College of Commerce, Amity University, Gurgaon, India

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