A Study on Impact of Leverage on Profitability Towards Selected Consumer Durable Companies

Abstract

For a subset of consumer durable companies, this study examined the relationship between financial leverage and earnings per share (EPS) and operating leverage and EPS. The amount of assets obtained through the use of debt and equity share capital is expressed as financial leverage. Understanding the current liquidity status of some consumer durable companies, including Voltas Ltd., Crompton, Whirlpool, and Bajaj Electronics, is a further objective of this research. Some of these businesses have a significant relationship between financial and operating leverage and EPS (earnings per share). As a result, this study examines how these choices affect shareholder profits as well as earnings before interest and taxes. To achieve the goals of the current study, ratio and correlation analysis have been used. The study was conducted between the fiscal years 2018-19 to 2022-23. The study collected data from consumer durables company’s annual reports and official websites during a five-year period. Finally, this research suggested that in order to enhance profitability, the impacted consumer durable concern should minimize its usage of debt in the capital structure and fixed costs in its operations.