Asian Journal of Management

Open Access Open Access  Restricted Access Subscription Access
Open Access Open Access Open Access  Restricted Access Restricted Access Subscription Access

Measurement of Operational Efficiency by using Leverage Analysis in Selected Airline Companies


Affiliations
1 Acharya Institute of Technology, Department of MBA, Bangalore-90, Karnataka, India
     

   Subscribe/Renew Journal


The competitive scenario compels a firm to grab the market with many differential strategies to maximize sales. But maximizing sales always do not lead to capitalize profitability. The operational efficiency of the firm can lead to efficient working capital management where company can trade off between profitability and liquidity. Operational efficiency is the capability of a firm to deliver goods and services to its customer in a cost effective manner without affecting the quality and standard. The cost management, pricing strategy, leverage play very important role in operating activities of business.

In this paper an attempt has been made to analyze cost structure. In order to measure effectiveness of cost structure, leverage analysis tool has been used. Through leverage analysis change in Sales, EBIT and EPS has been analyzed with a given cost structure. Karl person coefficient matrix has been used to know the relationship amongst variables. ANOVA used to know the operating and financial leverage pattern in all the companies.


Keywords

Operating Leverage, Financial Leverage, Cost Structure.
Subscription Login to verify subscription
User
Notifications
Font Size


  • Diego Maria Macri; Interfirm Organizations: A New Perspective for Cost Management

  • Bhabtosh Banerjee, Financial Management, PHI, Eastern economy edition, p162-221

  • Khanand Jain, Financial Management, TMcH, page no 18.3-18.20

  • Panday I.M, Financial Management, Vikas,9thedition, pg no

  • Abuzar M.A. Elijelly, liquidity profitability trade off, An empirical investigation in Emerging Market, IJCM Vo.14, No2, 2004 page 48

  • Meryem Duygun, Fotios Pasiouras, Artificial Intelligence Techniques: A Survey Assessing Bank Performance with Operational Research and Artificial Intelligence Techniques: A Survey, University of Bath

  • School of Management, Working Paper Series, 2009

  • Luis Garcia-Feijoo, Randy D. Jorgensen Can Operating Leverage be the Cause of the

  • Value Premium;

  • Abdul Raheman and Mohamed Nasr, Working Capital Management And Profitability - Case Of Pakistani Firms, International Review of Business Research Papers, Vol.3 No.1. March 2007, Pp.279 - 300

  • Otavio Ribeiro de Medeiros, Paulo Roberto Barbosa Lustosa, Jose Alves Dantas, The Impact of the Degree of Operating Leverage on Stock Returns: An Empirical Study in the Brazilian Market, working paper series http://papers.ssrn.com/

  • Gulser Meric, Chih-Chieh (Jason) Chiu, Ilhan Meric, Fair value television: sales volatility, business risk, and financial leverage, Review of business and finance case studies, Volume 3, Number 1, 2012

  • Doron Nissim, Stephen H. Penman, Financial Statement Analysis of Leverage and How It Informs About Profitability and Price-to-Book Ratios, October 2001

  • Shannon W. Anderson, Managing Costs and Cost Structure Vol 2. Oxford: Elsevier, October 2005

  • Kahl, Matthias, Lunn, Jason; Nilsson, Mattias., Operating Leverage and Corporate Financial Policies, SSRN Working Paper Series, Nov 2012.

  • Domestic air passenger traffic up 20 per cent in August, Business Today, September 17, 2013.

  • Special Report-Putting the Pieces Together, Special Report-India's Aviation Market, Airlines International , October 2012

  • Strischek, D. (2010). Operating leverage and break-even analysis for contractors. The RMA Journal, 92(10), 60-65,11.

  • Gahlon, J. M., and Gentry, J. A. (1982). On the relationship between systematic risk and the degrees of operating and financial leverage. Financial Management (Pre-1986), 11(2), 15


Abstract Views: 407

PDF Views: 1




  • Measurement of Operational Efficiency by using Leverage Analysis in Selected Airline Companies

Abstract Views: 407  |  PDF Views: 1

Authors

Satarupa Misra
Acharya Institute of Technology, Department of MBA, Bangalore-90, Karnataka, India

Abstract


The competitive scenario compels a firm to grab the market with many differential strategies to maximize sales. But maximizing sales always do not lead to capitalize profitability. The operational efficiency of the firm can lead to efficient working capital management where company can trade off between profitability and liquidity. Operational efficiency is the capability of a firm to deliver goods and services to its customer in a cost effective manner without affecting the quality and standard. The cost management, pricing strategy, leverage play very important role in operating activities of business.

In this paper an attempt has been made to analyze cost structure. In order to measure effectiveness of cost structure, leverage analysis tool has been used. Through leverage analysis change in Sales, EBIT and EPS has been analyzed with a given cost structure. Karl person coefficient matrix has been used to know the relationship amongst variables. ANOVA used to know the operating and financial leverage pattern in all the companies.


Keywords


Operating Leverage, Financial Leverage, Cost Structure.

References