IMPACT OF FINANCIAL LEVERAGE ON FINANCIAL PERFORMANCE OF SELECT INDIAN AUTOMOBILE COMPANIES- AN EMPIRICAL STUDY
Any Organization while practicing Capital Restructuring, the issue of proper mix of debt along with equity will arise. Financial leverage is one of the globally accepted issues. Correct proportion of debt and equity in Capital Structure will enhance profitability and thus it helps to increase the financial performance. Moreover financial leverage is a tool to enhance financial performance. Hence this study aims “To find out the impact of financial leverage on financial performance of Select Indian Automobile Companies”. Automobile Industry is a major contributor to Nation’s Gross Domestic Product. A sample of 9 Automobile companies listed in Bombay Stock Exchange & National Stock Exchange and who’s Average Market Capitalization above Rs.10000 Cr were selected. A Study Period of 10 Years from 2011-12 to 2020-21 is taken. The Debt Ratio and Debt Equity Ratio were selected- independent variable to measure financial leverage. To weigh the financial performance the selected dependent variable are Current ratio, Interest Coverage Ratio, Total Asset Turnover Ratio, and Net Profit Margin as an indicator of Liquidity, Solvency, Efficiency and Profitability respectively. Descriptive Statistics like Variance, Skewness, Standard Deviation, Mean and Kurtosis is used to know the nature of selected Variables. Panel Data Regression Analysis (Breusch-PaganTest, Hausman Test) is applied to find out the impact. The findings of this study are presented in this research paper. The financial performance of Automobile firms in Automobile Industry will improve by proper implementation of capital restructuring and financial leverage.
Financial leverage, Financial Performance, Liquidity, Solvency, Efficiency, Profitability, Panel Data Regression Analysis.