DEBT-EQUITY ANALYSIS OF RELIANCE INDUSTRIES LTD

Authors

  • Dr Anshuja Tiwari Firdous Ahmad Parray Dr Anshuja Tiwari( Department of Commerce Barkatullah University, Bhopal) Firdous Ahmad Parray( Research Scholar, Department of Commerce Barkatullah University, Bhopal)

Keywords:

Debt-Equity, Proprietary, Solvency, Liquidity, Capital gearing

Abstract

The present paper is an effort by the researchers to examine the financing pattern of a selected private company. The sample company selected for this research is Reliance Industries Ltd. and the study period is of five years (2010-2014).Long term solvency ratios indicate a firm’s ability to meet the fixed interest and costs and repayment schedules associated with its long term borrowings. This research work is an attempt to analyze the relation between external and internal equity and its impact on the performance of the company under study. It provides insights into two widely used financial tools i.e., ratio analysis. The objective of this paper is to analyze the Impact of debt and equity capital over the performance of Reliance Industries Ltd and to help the reader understand how these tools should be used to analyze the solvency position of a firm. To demonstrate the process of Debt-Equity analysis of Reliance Industries Limited’s various ratios calculated from balance sheet and income statements are analyzed in this paper. Regarding main result it has been found that the capital structure of the company is equally balanced by the outsiders and owners capital.

References

References (1) Raghuram G. Rajan & Luigi Zingales (1995), “What do you know about capital structure? Some evidences from international Data”. The journal of finance vol. 50(5) , 1421-1460 (2) Booth, L., Aivazian, V., Demirgüç-Kunt, A., and V. Maksimovic, 2001, Capital structure in developing countries, Journal of Finance 56, 87-130. (3) Modigliani, F. and M.H. Miller, 1958, the cost of capital, corporate finance, and the theory of investment, American Economic Review 48, 261-297. (4)Modigliani, F. and Miller, M.H. (1963) “Corporate income taxes and the cost of capital: A correction”, The American Economic Review, Vol. 53, 433-443 (5) Robichek & Myers (1965), “Determinants of small firm debt ratio: An analysis of retail panel data”. Small scale economics 5. 55-65. as well effective tool for identifying the long run functioning of the company. This paper is an outcome of the efforts made by the researcher in order to find out the financial policy of the company under study as well as its implementation. The study suggests that the company should increase the proportion of outsider’s equity in order avail the benefits of low cost debt.

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Published

2014-07-31

Issue

Vol. 3 No. 8 (2014): July 2014

Section

Articles

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