A Study of Leverage Analysis and Srofitability for dr. Reddy’s Laboratories
This paper discusses the relationship between Financial Leverage and Return of Investment, Operating Leverage and Return on Investment, and Combined Leverage and Return on Investment, for Dr Reddy’s Laboratories, the pharmaceutical firm having the highest sales turnover for the financial year 2013-14.The purpose of this paper is also to understand the decisions made by Dr Reddy’s Laboratories with regards to its asset utilization and Leverage management. This research paper thus analyzes the impact of these decisions on the Shareholder’s earnings and the Earnings before Interest and Taxes. Ratio analysis and correlation analysis has been deployed for meeting the objectives of the present study. Current Ratio, Quick Ratio, Debt to Equity Ratio, Total Asset Turnover Ratio and Return on Investment has been analyzed for understanding the financial performance of Dr Reddy’s Laboratories. The study has been carried out during the period of the financial period 2010 to 2014.
Keywords: Operating Leverage, Financial Leverage and Combined Leverage, Profitability.
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