Financial Performance Analysis of Indian Companies Belongs to Automobile Industry with Special Reference to Liquidity & Leverage
Pages : 39-51Download PDF
This manuscript discussed the impact of liquidity ratio i.e. current ratio, quick ratio and inventory turnover ratio on measure of profitability i.e. operating profit ratio, net profit ratio and return on net worth and also discussed the impact of leverage ratio i.e. degree of operating leverage, degree of financial leverage and combined leverage on such measures of profitability of companies under study. For such analysis data for the period of five years 2011 to 2015, of 25 Indian automobile companies out of 29 companies which is part of CNX500 Index of NSE, was collected. For data analysis mean, median, standard deviation as descriptive statistics & correlation, regression, ANOVA, test of significance as inferential statistics is used with the help of statistical package for social science (SPSS). On the basis of result obtained from such statistical techniques it is found that inventory turnover ratio is negative association with operating profit, quick ratio is positive association with operating profit & net profit while current ratio has negative relation with net profit. Further, this study highlighted that except combined leverage both operating and financial leverage has significant and negative relation with profitability in case of Indian automobile companies under study.
Keywords: Liquidity, Operating Leverage, Financial Leverage, Profitability, SPSS.