Professor, MBA Department & Principal Investigator, Andhra Loyola Institute of Engineering and Technology, Opp. Polytechnic Post office, Vijayawada, Andhra Pradesh
Online published on 18 October, 2019.
Finance decision is one of the important decisions of financial management in any Enterprise. Capital structure refers to the combination of debt and equity. The financial manger has to strike a balance between various sources of funds so as to maximise return of an Enterprise without affecting risk composition in the business. An optimal capital structure is very much essential to maximise the owner's wealth of any Enterprise. In this paper, an attempt is made to analyse the capital structure in P. L. Plast Private Limited. P. L. Plast Private Limited is a Micro Enterprise located in Nellore district of Andhra Pradesh state in India. The Enterprise is manufacturing agricultural pipes. The Micro Enterprise has an annual turnover of Rs. 113.1 Lakhs as per 2015–16 annual accounts. The total assets of the company are Rs.164.3 Lakhs. In this paper composition of capital structure in the enterprise for a period of ten years is analysed. Leverage analysis was also done. Debt-Equity ratio, Proprietary Ratio, Solvency Ratio, Fixed Assets to Net worth Ratio, Fixed Assets Ratio, Current Assets to Proprietary Ratio and Interest Coverage Ratio are calculated for the study period. Chi-square test is used for testing Hypotheses.
Degree of Financial Leverage, Degree of Operating Leverage, Interest Coverage ratio, Proprietary ratio, Solvency ratio
