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- Title
Impact of Financial Leverage on Financial Performance of a Firm.
- Authors
Kalsie, Anjala; Shrivastav, Shikha Mittal
- Abstract
The present study seeks lo examine the impact of financial leverage on the financial performance of the firm. A sample of 10 listed companies for a period of 5 years from 2011-12 to 2015-16 has been analyzed using multiple linear regression analysis of the panel data between capital structure and financial performance. ROA, ROE, EB1T Margin, and EPS were used as the indicators of financial performance and Debt-Equity ratio was used as an indicator of financial leverage. The research study concludes that financial leverage or capital structure significantly impacts the financial performance (ROA, ROE, EB1T Margin, and EPS) of a firm. Financial leverage has a negative impact on the performance of a firm as a whole (measured through ROA), while it significantly increases the net return received by the equity investors (measured through ROE).
- Subjects
FINANCIAL leverage; FINANCIAL performance; CAPITAL structure; REGRESSION analysis; DEBT-to-equity ratio
- Publication
IFIMs Focus: The International Journal of Management, 2017, Vol 13, Issue 2, p6
- ISSN
0973-9165
- Publication type
Article