Profitability and Financial Leverage: A Study Based on Stitched and Unstitched Textile Sector of Pakistan

Abstract

The major purpose that lies behind conducting this research remains to understand the volatility or consistency of the components of profitability including Return on Assets (ROA), Return on Equity (ROE) and Profit Margin (PM) in the Stitched and Unstitched Industry of Pakistan Textile Sector. The research method used serve the purpose of this study is Independent t-test using SPSS Software. The data considered for conducting this research is taken from the time period from 2012 to 2015, comprising of 44 companies falling in the Pakistan Textile Industry. The key aspect covered by this article remains to analyse the stitched and unstitched industries on the basis of the three profitability ratios and determine which of them are better with respect to their performance in the financial, investing and operating activities that would be identified with the help of ROA, ROE and PM. the results obtained from this study determine that the stitched industry is found with better ROA, ROE and PM as compared to the Unstitched industry.

Keywords: Return On Asset (ROA), Return on Equity (ROE), Financial Leverage; Profit Margin, Stitched Textile Sector, Unstitched Textile Sector, profitability.

DOI: 10.7176/RJFA/10-8-11

Publication date: April 30^th 2019