Working Capital Leverage –Testing of the Hypothesis Developed by E. W. Walkar
DOI:
https://doi.org/10.33516/rb.v43i3.91-103pKeywords:
Leverage, Optimum Level, Return, Risk, Sensex Companies, Working Capital.Abstract
Maintaining optimum level of working capital is a serious problem to the finance manager as it confirms satisfactory earnings to the corporate without jeopardizing its working capital position. Viewers in this perspective, the present study is devoted to judge the strength of working capital leverage of ten reputed Sensex Companies listed at BSE in India and especially to test the hypothesis developed by Prof. Ernest W. Walkar. Based on correlation analysis, the findings of the study conclude that barring a very few cases, there exists a negative relationship between risk and return of the selected companies, and thus, moderately satisfy the proposition of Walkar. Leverage as a control variable has significant negative relationship with firm value and profitability of firms implying increase in the level of leverage leads to decline in the profitability of the firm as well as value of the firm.Downloads
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