Asian Journal of Management

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


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

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

Abstract Views: 330  |  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