IMPACT OF FINANCIAL LEVERAGE ON COMPANYS‘ PERFORMANCE:A STUDY OF NIFTY ENERGY INDEX COMPANIES

Mr. Hari Krishna Karri; Dr. M. Srinivasa Narayana

Volume : VIII, Issue : VI, June - 2019

IMPACT OF FINANCIAL LEVERAGE ON COMPANYS‘ PERFORMANCE:A STUDY OF NIFTY ENERGY INDEX COMPANIES

Mr. Hari Krishna Karri, Dr. M. Srinivasa Narayana

Abstract :

The objective of the present research is to understand the concept of financial leverage, return on assets and return on equity and its impact on performance of the firms listed at National Stock Exchange, India. A sample of ten companies energy sector representing the NIFTY energy index have been chosen for the study. Financial leverage is measured through short term debt ratio, long term debt ratio and total debt ratios and firm’s performance is measured through return on equity (ROE) and return on assets (ROA). Pearson’s correlation coefficient and Linear Regression analysis was used to study the relationship. The impact was studied for each measure of financial leverage factor on both the performance measures of the company. The study found that the overall relationship between financial leverage and firm’s performance have given mixed results.