Impact of Leverage and Risk Exposure on Financial Performance in SMEs of Northern Punjab

Abstract

Basic objective of this research was to discover the impact of Leverage on Risk and Profitability. For this purpose main focus of research was SMEs and Commercial sector of Pakistan. Leverage has three types DOL, DFL and DTL. And these three types of leverage are independent variables for this research while dependent variables of this research are ROE, ROA, ROS, GM and Risk. Further sales growth is also used as control variable in this research. Time frame for data analysis was 3 years from 2012 to 2014. Sample size for this research is 61 SMEs and Commercial sector organizations. Secondary data was used in this research and data was collected by using different data collection methods. SPSS version 20 was used to analyze data. Linear regression analyses were used to check the significant relationship between independent variables and dependent variables. This research is limited to just SMEs and Commercial sector organization so we cannot use these results for overall industry or sectors. This research is entirely new research for SMEs and Commercial sector organizations.

Keywords

• Leverage
• Risk Exposure
• Profitability
• Small Enterprises
• Medium Enterprises and Commercial Sector Organizations