Corporate Leverage and Financial Decision in the Indian Textile Industry

In the presence of market imperfections, leverage has the potential tohave an important influence on investment decisions. If a firm makesmoney on its borrowing (has favorable financial leverage), the shareholdersrealize higher earnings per share (EPS) than would be the casein the absence of debt, as the debt-equity ratio (DER) is a long termrisk measure. In the present study 25 textile firms, which are listed inBombay Stock Exchange are taken as a sample for the study periodfrom 2004 to 2008. The study reveals that the firms i. e. ACM, AFL, ASL,BASML, BCIL, GSM, GDPM and GJML show significant growth rate infinancial, operating and combined leverage.