ANALYSIS OF LEVERAGE POSITION OF INDIAN HOTEL INDUSTRY

Abstract

The present study describes that it is one of the important instruments to design an appropriate capital structure mix or financial plan. To design an appropriate capital structure mix or financial plan, the amount of EBIT under various financial plans, should be related to earning per share. One widely used means of examining the effect of leverage to analyze the relationship between EBIT and earning per share is leverage ratio. Leverage ratio is used to calculate the leverage of a company to get an idea of the Company's methods of financing or to measure its ability to meet financial obligations. In the present study four types of ratios were calculated, that is, debt to equity ratio, funded debt to total capitalisation ratio, net worth to total assets ratio and fixed assets to net worth ratio. This analysis describe that the need for the leverage to reduce the risk, that is, the effect of changes in revenue and costs on the shareholders’ return.