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The financial repercussion of cost, revenue and profit: an extension in the BEP and CVP analysis

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Abstract

The study measures the impacts of the profitability factors on the capital structure of a firm. A simulation analysis has been applied in the study and the impacts of Cost, Revenue, Profit, Tax Liability and Dividend have been tested. It has been found that capital growth of a firm does not depend on the profitability factors. However, the factors of the profitability are important in determination of the liquidity position of a firm. It is interesting that a large number of studies have measured the effects of capital structure on the profitability, but the present study measured the effect of the profits' factors on the capital structure of a firm.

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  • Ayub Mehar, 2005. "The financial repercussion of cost, revenue and profit: an extension in the BEP and CVP analysis," Applied Financial Economics, Taylor & Francis Journals, vol. 15(4), pages 259-271.
  • Handle: RePEc:taf:apfiec:v:15:y:2005:i:4:p:259-271
    DOI: 10.1080/0960310042000314205
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    1. Myers, Stewart C., 1984. "Capital structure puzzle," Working papers 1548-84., Massachusetts Institute of Technology (MIT), Sloan School of Management.
    2. Jensen, Gerald R. & Solberg, Donald P. & Zorn, Thomas S., 1992. "Simultaneous Determination of Insider Ownership, Debt, and Dividend Policies," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 27(2), pages 247-263, June.
    3. Myers, Stewart C, 1984. "The Capital Structure Puzzle," Journal of Finance, American Finance Association, vol. 39(3), pages 575-592, July.
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