Impact of Operating Leverage on Profitability: A Study on Indian Automobile Industry

Abstract

The term 'profitability ratio' is a class of financial metric that is used
to assess a business's ability to generate earnings as compared to its
expenses and other relevant costs incurred during a specific period
of time. The study is an attempt to analyze the impact of operating leverage on profitability of Indian Automobile Industry. The study has chosen 20 sample firms from Automobile industry in India, which are listed in National Stock Exchange. The study used descriptive statistics, correlation and regression for analysis. The study proves that there is a significant impact of operating leverage on profitability. The analysis of data reveals that the operating leverage has impact, of course positively, on profitability of firms of automobile industry as a whole in India.