THE LEVERAGE EFFECT IMPACT BETWEEN THE ECONOMIC & FINANCIAL FLOW CASE STUDY: WHOLESALE OF MOTOR VEHICLE PARTS AND ACCESSORIES (NACE: 4531)
Journal Title: European Journal of Business and Social Sciences - Year 2017, Vol 6, Issue 2
Abstract
This paper intends to analyze the dependence between financial return (as well as the endogenous addictive variable), economic return and leverage effect (as independent, exogenous variables), applied on the companies in the sector of wholesale trade of spare parts. Using the panel data model over the time series for 2008-2015 on the companies of this sector, we conclude that in fact 99% of the financial return variance is explained by the economic return and the leverage effect. The second half of the paper deepens the equity profitability diagnosis of the analyzed sector, through its disintegration in the return margins, rotation indicators and capital structure (DuPont). The last section focuses on the inequality of returns registered by the large companies (over 1 mil. Euro in revenues), where we notice that the economic return (ROA) registers a constant decrease and the values are lower according to the average weighted cost of capital.
Authors and Affiliations
Petre BREZEANU, PhD. | Professor, The Bucharest University of Economic Studies Department of Finance, Rodica Boanta ( Baciu), PhD student| The Bucharest University of Economic Studies Department of Finance
Keywords
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- EP ID EP10893
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