Abstract
The Cost of Capital plays a significant role in capital budgeting decisions and is also used as a financial standard. The Weighted Average Cost of Capital (WACC) caters to the need to have a single rate, which helps to analyze and compare the cost of different sources of funds. It is important for all companies to understand the relationship between the cost of capital and its profitability to take proper care of the cost of capital to ensure a favorable financial situation in the company. The use of a statistical method such as correlation in understanding the relationship is systematic and scientific, which will provide better insight for future decision making. This paper undertakes to study the relationship between the cost of capital and profitability of Ports And Special Economic Zone Limited.
Highlights
Finance is very important to all industry and its maximization
Bhatnagar and et al (2015)[2], The aim of this paper is to identify the optimum capital structure and cost of capital
This study reveals that that board characteristics failed to affect cost of capital especially cost of debt
Summary
Finance is very important to all industry and its maximization. company should keep an eye participants for the survival, growth, and on all the factors that will affect its profitability. He conducted a study on the selected Indian Cement Industries for the period from 2000-2001 to 2007-2008 He calculated the financial leverage and Weighted Average Cost of Capital and compared them using the coefficient of correlation and t-test analysis. Bhargav Pandya (2017)[10], aims to analyze the effect of financial leverage on the cost of capital He conducted a study on 28 companies listed in the stock exchange for a period of three years from 2013 to 2015. He calculated debt-equity ratio and interest coverage ratio to analyze the relationship of financial leverage on cost of capital. (xi − Mx )[2] (yi − My )[2] xi: First variable yi: Second variable Mx: Mean of x values My: Mean of y values x(xi-i-MMxxa)2ndanydi-(Myiy-:MDye)2v:iaDtieovniastcioonressquared (xi- Mx) (yi-My): Product of deviation scores The square of correlation coefficient that is, r2 shows the degree of dependence
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