Financial Leverage & Firms Profitability

This is an empirical textbook prepared to highlight the viability of financial leverage in enhancing firms' profitability across real sectors of the economy. Prior to this recent time, earlier literatures have created misconceptions of the negative effect of financial leverage on firms' profitability without exact transmission channel of influence based on theoretical pollutions. On this backdrop, this text made a significant attempt to provide empirical insight on the link between financial leverage as debt finance options and firms profitability for randomly selected firms in a developing country using panel model approach. The static fixed and random effect panel model techniques were employed. The econometric evidence revealed that long term liability, productivity, firms size and liquidity were found to be the major factors enhancing firms profit level in the long-run.