IDEAS home Printed from https://ideas.repec.org/a/rnd/arimbr/v3y2011i5id76.html

The Impact of Leverage Levels on Firm’s Performance and Profitability: a case of Pakistani Industries

Author

Listed:
  • Waqas Rasool
  • Aasia Asif
  • Farheen Kayani
  • Mohsin Zafar

Abstract

This paper examines the relationship between the leverage levels, performance and profitability of the 19 Pakistanis firms with in three sectors, commercial banking, cement and fertilizer sector starting from 2004 to 2010. The purpose was to check the trends which are being followed by these industries and how much their capital structure policy is dynamic and relating to their sale, earnings, performance and stock values. Arithmetic Mean (A.M), standard derivation (S.D) were used to check the trend of data and then correlation was used sector wise to check the relationship of dependent and independent variables. At the end Regression test was employed on data .Study finds that there is relationship between leverage ratio i.e. DTCM (independent variable) and its determinants i.e size, tangibility, return on asset and RET except cash. A debt does not represent a suitable form of financing with value-enhancing investment projects of the firms, as an alternative, such firms issue equity. On the other hand, when there is a lack of profitable projects, a firm prefers issuing debts and increasing dividends. Management can increase the performance and profit indicators just by changing the debt equity structure.

Suggested Citation

  • Waqas Rasool & Aasia Asif & Farheen Kayani & Mohsin Zafar, 2011. "The Impact of Leverage Levels on Firm’s Performance and Profitability: a case of Pakistani Industries," Information Management and Business Review, AMH International, vol. 3(5), pages 242-249, November.
    • Handle: RePEc:rnd:arimbr:v:3:y:2011:i:5:id:76
    DOI: 10.22610/imbr.v3i5.940
    as

    Download full text from publisher

    File URL: https://amhinternational.com/imbr/article/view/76-the-impact-of-leverage-levels-on-firms-performance-and-profitability-a-case-of-pakistani-industries
    File Function: Abstract page
    Download Restriction: no
    File URL: https://amhinternational.com/imbr/article/download/76-the-impact-of-leverage-levels-on-firms-performance-and-profitability-a-case-of-pakistani-industries/9b686d56-72ab-4b22-84e6-0fc1628e4f84
    File Function: Full text
    Download Restriction: no
    File URL: https://libkey.io/10.22610/imbr.v3i5.940?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rnd:arimbr:v:3:y:2011:i:5:id:76. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AMH International (email available below). General contact details of provider: https://amhinternational.com/imbr .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.