A Study on Profitability Analysis at Shreejee Tex Print Pvt Ltd

Abstract

The major objective of this study is to analyses and understand the impact of leverage on the profitability of the firm. This study investigates the relationship between the leverage (financial leverage, operating leverage and combined leverage) and the earning per share. And it aims to describe how the earning capacity of the firm is influenced by the fixed operating costs and the fixed financial charges. Leverage analysis is an important tool in the business. Though leverage analysis firm can analyses the impact of fixed cost. Data is retrieved from the financial statements of the company for the five years and accordingly the leverages, degree of leverages are analyzed. The present study makes an attempt to analyses the impact of both operating leverage and financial leverage which obviously gives combined leverage. We can maximize the returns through leverage. Profitability refers to the operational efficiency of a company to generate profit. A company should earn profit to survive and grow over a long period of time. Profitability is measure of efficiency and control it indicates the efficiency and effectiveness with which the operations of the business carried on. The results suggest that the leverage and profitability are related, and leverages are having impact on the profitability of the firm.