A Study on the Impact of Financial Leverage on Profitability: Evidence from Rajendra Coffee Ltd, Kodagu

Abstract

Leverage Analysis is one of the best tool that an organization can use for its self-analysis of growth or decline. Through Leverage analysis firm can analyse the effects of fixed cost expenses and the returns or the income. This research paper focuses on measuring the influence of Leverage analysis over the growth of the firm. Data is retrieved from the previous three-year financial statement of the firm. And also under this study the current status of the operational leverage, financial leverage and combined leverage has been employed to predict the optimum use of financial resources of an organisation. The major objective of the study to give feasible solution to the selected company “The Rajendra Coffee Limited, Kodagu, Karnataka” Which is agro based industry to survive with numerous competitors. Due to stiff competition, there is a chance of unstable profit in the business. Expected profit will be highly influenced by major externalities. The study gives a rational solution to the company to be the best performer among major key players in the field, by applying strategical approach to earn reasonable return in financial performance.