The Effect of Financial Leverage on Risk and Return with Special Reference to a Steel Industry at Puducherry

The Effect of Financial Leverage on Risk and Return with Special Reference to a Steel Industry at Puducherry

Sindhuja Sagadevan

Guide: Dr. S. Vaidheeswaran, Associate professor

Master of Business Administration

Manakula Vinayagar Institute of Technology, Puducherry

ABSTRACT:
The study investigates the effect of financial leverage on risk and return in the context of a manufacturing company operating in the steel industry at Puducherry. Financial leverage, characterized using debt financing to supplement equity capital, is examined in relation to its impact on the company's risk exposure and return on investment. The research employs a mixed-method approach, combining quantitative analysis of financial data with qualitative insights from managerial perspectives. Key variables such as debt-to-equity ratios, interest coverage ratios, and profitability metrics are analyzed to assess the relationship between financial leverage, risk, and return. Additionally, interviews and surveys with company executives provide valuable insights into the decision-making processes related to capital structure management and risk mitigation strategies. The findings of this study aim to contribute to a deeper understanding of the complexities surrounding financial leverage decisions and their implications for organizational performance and stability in the steel manufacturing industry.