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The Impact of Financial Leverage to Profitability Study of Companies Listed in Bucharest Stock Exchange

Author

Listed:
  • Georgeta VINTILA

    (The Academy of Economic Studies, Bucharest, Romania)

  • Floriniþa DUCA

    (The Academy of Economic Studies, Bucharest, Romania)

Abstract

The present study examines the relationship between return on equity (ROE), leverage, size of firms and total assets turnover. A sample companies registered under Bucharest Stock Exchange were examined. The study employed regression method to estimate the impact of debt level on profitability (measured by Return on Equity or ROE). The empirical findings indicate that high debt level causes significant positive impact on ROE. Debt is used by many companies to leverage their capital and profit. However, debt is not the only factors that effect to leverage capital and profit.

Suggested Citation

  • Georgeta VINTILA & Floriniþa DUCA, 2012. "The Impact of Financial Leverage to Profitability Study of Companies Listed in Bucharest Stock Exchange," Ovidius University Annals, Economic Sciences Series, Ovidius University of Constantza, Faculty of Economic Sciences, vol. 0(1), pages 1741-1744, May.
    • Handle: RePEc:ovi:oviste:v:xii:y:2012:i:12:p:1741-1744
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    Citations

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    Cited by:

    1. Farouq Altahtamouni & Ahoud Alfayhani & Amna Qazaq & Arwa Alkhalifah & Hajar Masfer & Ryoof Almutawa & Shikhah Alyousef, 2022. "Sustainable Growth Rate and ROE Analysis: An Applied Study on Saudi Banks Using the PRAT Model," Economies, MDPI, vol. 10(3), pages 1-12, March.
    2. Lina Hani Warrad & Mahmoud Nassar, 2017. "Could Profitability, Activity and Use of Equity Finance Increasing DuPont Model of Return on Equity? Jordanian Case," International Review of Management and Marketing, Econjournals, vol. 7(3), pages 35-41.

    More about this item

    Keywords

    Profitability; firm size; Total assets turnover; equity multiplier;
    All these keywords.

    JEL classification:

    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General
    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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