CP (Cost-Profit) Analysis of Unlevered and High Levered Companies in India - A Select Study

Abstract

Profitability of any sector is governed by many factors. Among various factors, cost has its direct impact on profitability. If it is not assessed, monitored and controlled, then it will result in to the repercussions, though sales are favorable. Cost above the line effects not only manufacturing and operating efficiency but also the returns on the total capital invested. In the present study, an attempt is made to analyze the impact of direct, operating and non operating cost on profitability position of the selected levered and unlevered companies. In the second stage, an attempt is made to find solvency position of these two groups of companies’. The Companies were selected on the basis of Zero debt equity ratio and High debt equity ratio. Major findings suggest, difference exists between levered and unlevered groups. The leverage affects manufacturing, none operating cost to the highest and operating efficiency to the least and than a directly impacts on overall solvency position.