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Relationship Between Leverage and Profitability of Selected Real Estate Companies †

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Pubblicato in:IUP Journal of Accounting Research & Audit Practices vol. 24, no. 3 (Jul-Sep 2025), p. 355-370
Autore principale: Paul, Atul Kumar
Pubblicazione:
IUP Publications
Soggetti:
India
Financial leverage
Annual reports
Stockholders
Operating leverage
Employment
Capital structure
Debt financing
Volatility
Emerging markets
Financial statement analysis
Gross Domestic Product > GDP
Solvency
Manufacturing
Corporate profits
Economic growth
Profitability
Liquidity
Banking
Real estate companies
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Abstract:The paper investigates the influence of leverage on the financial performance of selected Indian real estate companies, focusing on profitability indicators like Return on Total Assets (ROTA) and Return on Capital Employed (ROCE). To evaluate and compare the leverage positions across companies, a comprehensive ranking system has been applied based on mean values and coefficients of variations of the profitability indicators. Real estate companies constantly performing better based on the annual turnover and listed on NSE and BSE have been considered for the study. The findings underscore the importance of strategic leverage decisions in maximizing shareholder value and optimizing capital structure in the Indian real estate sector. The study highlights the critical balance that firms must maintain between risk and return while managing debt financing. The study concludes that high degree of leverage is associated with higher profitability for the real estate sector. Future research may be conducted considering sectoral comparisons and regulatory impacts to provide a broader understanding of capital structure dynamics in emerging economies.
ISSN:0972-690X
DOI:10.71329/IUPJARAP/2025.24.3.355-369
Fonte:Accounting, Tax & Banking Collection