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Essay / The Impact of Financial Leverage on Profit Earnings... 'it was prepared solely for credit in this class, and that this review, including the "main problem of the article" section, was written in my own words. » Article citationNegi, P., Sankpal, S., Mathur, G. and Vaswani, N. (2012). Impact of financial leverage on shareholder earnings and market value. IUP Journal of Accounting Research and Auditing Practice, 11(1), 35-46. Retrieved from http://ezproxy.bellevue.edu:80/login?url=http://search.proquest.com/docview/1019956952?accountid=28125Main article numberThis article reviews a study of 50 companies listed on NSE and BSE: 10 in the automobile, cement, FMCG, oil and gas and pharmaceutical sectors in India. The aim of the study is to assess the impact of financial leverage on shareholder returns and market value. The 10 companies selected in each sector are divided equally into two categories: low leverage companies and high leverage companies. Shareholder return is calculated through earnings per share and return on equity ratio. As for market value, it is measured by the dividend payout ratio and the price-earnings ratio. The results showed that financial leverage has little or no effect on the earnings per share of highly leveraged Indian companies in the automobile, cement, FMCG, oil sectors. and gas and pharmaceutical industries but has an impact on the earnings per share of low-leverage companies in the automobile and cement industries in India. Relationship with priceThis article focuses on some key concepts covered in Chapter 1: shareholder value and capital structure, including the composition of debt and equity on which a company relies. . The ultimate goal of managers is to maximize the share of paper. A company that raises capital through debt financing has a favorable outlook, while a company that raises capital through equity financing is considered to have an unfavorable outlook. outlook.I think financial managers need to be very careful about the decisions they make when choosing whether to finance with debt or equity. While it may seem more cost-effective to do this through debt, it comes at a cost and the motivation behind choosing one or the other should, in my opinion, be which one between the two will lead for long-term growth and will be sustainable in an economic context. terms. One thing I also understand from this article is that choosing debt financing over equity as the best way to balance the interests of all stakeholders and increase shareholder value depends on the type of industry in which the company operates and its current level of debt..
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