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Author(s): Jasminder Kaur, Harsh Vineet Kaur

Email(s): Email ID Not Available

DOI: 10.5958/2321-5763.2015.00040.2   

Address: Jasminder Kaur1, Dr Harsh Vineet Kaur2
1Assistant Professor, Institute of Management Studies, Bhaddal, Ropar
2Assistant Professor, School of Commerce and Management, Sri Guru Granth Sahib World University, Fatehgarh Sahib
*Corresponding Author

Published In:   Volume - 6,      Issue - 4,     Year - 2015

The paper focuses to investigate the effect of leverage on profitability of companies in FMCG Sector in India. For the purpose of the study of the relationship between leverage(independent variable) is defined in terms of Financial Leverage and Profitability (dependent variable) is defined in terms of earning per share, return on net worth (return on equity), and net profit margin. The data base is fast moving consumer goods companies listed on S&P BSE FMCG Index. The research techniques include Karl Pearson Correlation and T-Test. The data of five year period from F.Y 2009-10 to 2013-14 is taken for the purpose of the study. It is expected that financial leverage exerts its influence over profitability margin and investment. The results indicate that three among seven companies under study have witnessed negative correlation between EPS and degree of financial leverage, while four companies have faced decline in return on net worth as aftermath of leverage adopted by them. It is apparent that presence of debt has not brought any positive change in net profit margins which could be due to the fact that higher interest payments cause decline in net profits.

Cite this article:
Jasminder Kaur, Harsh Vineet Kaur. Impact of Financial Leverage on Profitability of Fast Moving Consumer Goods Companies Listed on BSE. Asian J. Management; 6(4): Oct. -Dec., 2015 page 276-282. doi: 10.5958/2321-5763.2015.00040.2

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DOI: 10.5958/2321-5763 

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