IS LEVERAGE MAGNIFYINGTHE PROFITABILITY OF A COMPANY? (SOME FACTS ABOUT PAKISTAN’S FERTILIZER SECTOR)

Abstract

Agriculture products are actually the backbone of any country in terms of their contribution in the growth and GDP directly or indirectly. Pakistan’s economy is also mainly depends upon the agricultural products. Agricultural products are solely depends upon the availability of their right ingredients like Urea and Pesticides.The production of the fertilizer companies always depends upon the availability of the financial resources. We have analyzed the availability of financial resources and their impact on the profitability. This study shows that debt source of financing has a positive impact on the profitability. Mainly the most importantly the companies should focus on the long term side of debt financing. This will magnify their returns. The data for past 10 years of Pakistan Stock Exchange (PSE) listed top fertilizer companies has been analyzedand the factual results are giving a positive indication regarding the impact of leverage on profitability.