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The Role of Leverage to Profitability at a Time of Economic Crisis

Author

Listed:
  • Panagiotis Papadeas
  • Kossieri Evangelia
  • Katsouleas George

Abstract

This article examines the assets, liabilities, equity, expenses, sales and profits of the Greek technology sector throughout the period 2008-2015. The author is attempting to interpret the effectiveness and profitability of corporations listed in the Athens Stock Exchange in the context of the recent economic crisis through the concepts of operating leverage and Altman z-score. Our results indicate that the above-mentioned theories can be insufficient, when additional factors, such as the degree of expenses-to-sales adjustment, or a more qualitative approach in financial statements analysis is not taken into account as well.

Suggested Citation

  • Panagiotis Papadeas & Kossieri Evangelia & Katsouleas George, 2017. "The Role of Leverage to Profitability at a Time of Economic Crisis," International Business Research, Canadian Center of Science and Education, vol. 10(11), pages 70-78, November.
    • Handle: RePEc:ibn:ibrjnl:v:10:y:2017:i:11:p:70-78
    as

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    References listed on IDEAS

    as
    1. Edward I. Altman, 1968. "Financial Ratios, Discriminant Analysis And The Prediction Of Corporate Bankruptcy," Journal of Finance, American Finance Association, vol. 23(4), pages 589-609, September.
    2. Edward I. Altman, 1968. "The Prediction Of Corporate Bankruptcy: A Discriminant Analysis," Journal of Finance, American Finance Association, vol. 23(1), pages 193-194, March.
    3. Percival, John R., 1974. "Operating leverage and risk," Journal of Business Research, Elsevier, vol. 2(2), pages 223-227, April.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    accounting data; profitability; adjusting expenses; sales; Z-score;
    All these keywords.

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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