A Study on Impact of Capital Structure on EBIT-EPS of KDMPMACU Limited
- May 22, 2018
- Posted by: RSIS
- Category: Management
International Journal of Research and Scientific Innovation (IJRSI) | Volume V, Issue V, May 2018 | ISSN 2321–2705
A Study on Impact of Capital Structure on EBIT-EPS of KDMPMACU Limited
R.V. Sankara Rao
Research Scholar, Acharya Nagarjuna University, Guntur, Andhra Pradesh, India
Abstract: This study examines the impact of capital structure on the performance of the company. It is measured using EBIT-EPS analysis. In this paper an attempt is made to analyze the capital structure of KDMPMACU Limited during the period 2011-12 to 2015-2016, so as to understand the factors that influenced the capital structure decisions of the company and to know the impact of capital structure decisions on profitability and performance of the company. The company’s performance is measured through BIT-EPS analysis. Increase in the level of debt and net worth increases the debt equity ratio. Capital structure is the crucial decision to be taken by every business, the positives and negatives of these decisions plays an important role in determining the future of every business.
In this paper, researchers try to quantify the effect of Operating Income or Earning before Income and Taxes (EBIT) & simultaneously the effects of Earning per Share (EPS) on shareholder wealth.
Keywords: Capital Structure, Earnings before Interest Tax (EBIT), Earnings per Share (EPS), Earning after Tax (EAT), Capital Structure.
I. INTRODUCTION
Capital structure is that part of financial structure which represents combination of long-term sources of funds used to raise the capital required by the company. Normally the sources include Equity, Preference, and Debt Sources. This combination or mix influences the overall cost of capital. Normally capital structure will be the mix of equity and debt. The proportion of this equity and debt to the total capital is decided by the company according to the financial position and ability to raise such capital. The decision regarding the capital structure is very important because it affects the earnings per share or wealth of the shareholders.
