New Concepts about DOL-DFL Nexus: The Relationships with Market Sensitivities, Firm-Specific Risk and Other Issues

This paper investigates several issues related to the Degree of Operating Leverage (DOL) and the Degree of Financial Leverage (DFL) in the light of advanced concepts on the matter proposed by recent studies. In particular, the paper treats mainly the relationships between DOL and market sensitivities and the impact of the uncertainty on DOL and DFL volatility together with minor issues. We used the DOL function already developed to analyse what market conditions facilitate or hinder, with or without economies of scale, Revenue development or a profit-maximising policy. DOL records the reaction coming from the factor and product markets together with the management decision process. DOL highlights whether the current economic strategy is, or not, successful and why, so that management can perceive clues to evaluate both the policy and its implementation. The uncertainty related to six fundamental economic variables determining EBIT and Net Profit growth volatility eventually contaminates DOL and DFL. Not all such variables impact DOL and DFL volatility, but when it happens, the firm’s risk is representable through the asymptotes of the DOL and DFL curves generated by each specific variable. Such a risk rate is independent of the chosen uncertainty range and is firm unique in any financial period. In normal economic conditions, DOL undervalues firm-specific risk while DFL carries out a containment function. The higher risk rate comes from the unit price change, that coupled with a sturdy quantity/mix growth, could induce negative economic and financial results.

Greek Fish Farming: Measuring Profitability and Efficiency of the Sector at the peak of Economic Crisis

Fish farming play important role in providing food and income in many EU countries, either as a stand-alone activity or in association with crop agriculture and livestock rearing. Fish farming is widespread in Greece and differs only with respect to species, production systems and volumes. Moreover, the Greek economic crisis has heavily affected the fish farming sector and challenges the competitiveness of farms. The objective of the current paper is the examination of the profitability and efficiency of the Greek fish farming industry during the most crucial years of Greek economic crisis by measuring firm’s performance using a panel data set of companies. The research is based on financial data of sixty-eight aquaculture firms for the period 2010-2015. The empirical results indicate that firms share of total sales has a positive impact on profitability, while an alternative proxy, the total assets is negatively linked to efficiency. Firm's profitability is positively affected by liquidity, working capital management, productivity and industry’s growth and negatively by financial and operating leverage. Firms Efficiency is determined positively by profitability and ability to repay its debt obligations and negatively by capital intensity, operating leverage and size

BUSINESS RISK ANALYSIS IN ARI WIBOWO'S CENTRAL TILE INDUSTRY IN LOHJINAWI VILLAGE, PRINGSEWU REGENCY IN 2018 - 2020

Business risk is the potential deviation of corporate results and financial results because the company enters a certain business with a typical industrial environment and uses certain technologies. In business there are so many decisions or actions that must be made, it makes more and more risks that may occur as a result. The purpose of this research is to find out how big the Business Risk Central Tile Industry in Lohjinawi Village, Pringsewu Regency,The analysis was carried out descriptively, using standard deviation of ROE; Financial Leverage; Operating Leverage namely the sensitivity of EBIT to changes in the company's sales; as well as Degree of Operation Leverage (DOL). The results of the analysis show that: 1) ROE, has increased due to an increase in Sales and an increase in EAT, and vice versa; 2)The use of debt can increase the Company's ROE; 3) Operating Leverage, where EBIT is very sensitive to changes in company sales; 4)Degree of Operating Leverage (DOL) measures what percentage of EBIT changes if sales; 2018-2019 of 1.50x which means DOL of 150% that every 100% increase or 1x sales will cause an increase in operating profit of 1.50x otherwise, if sales decrease 1x then operating profit will decrease by 1.50x. While the year 2019-2020 amounted to 2.01x which means a DOL of 201% indicates that every 100% or 1x decrease in sales will cause a 2.01x decrease in operating profit. On the other hand, if sales decrease 1x, operating profit will decrease by 2.01x.

USE OF OPERATIONAL ANALYSIS AS A TOOL FOR MANAGING A COMMERCIAL ORGANIZATION IN A CRISIS ECONOMY

The article explores the possibilities of using operational analysis tools for managing a commercial organization in a crisis economy. The approaches to the use of indicators of the profitability threshold and the margin of financial strength to prevent the insolvency and bankruptcy of the organization are considered. The target function of the economic activity of a commercial organization has been formalized. The possibilities of regulating the strength of the operating leverage to reduce the loss of the company's profit with a decrease in sales in the context of the economic crisis have been studied.

Labor Unions and Product Quality Failures

In this paper, we study the impact of labor unions on product quality failures. We use a product recall as our measure of quality failure because it is an objective metric that is applicable to a broad cross-section of industries. Our analysis employs a union panel setting and close union elections in a regression discontinuity design framework to overcome identification issues. In the panel regressions, we find that firms that are unionized and those that have higher unionization rates experience a greater frequency of quality failures. The results obtain even at a more granular establishment level in a subsample in which we can identify the manufacturing establishment associated with the recalled product. When comparing firms in close elections, we find that firms with close union wins are followed by significantly worse product quality outcomes than those with close union losses. These results are amplified in non–right-to-work states, where unions have a relatively greater influence on the workforce. We find that unionization increases firms’ costs and operating leverage and, consequently, crowds out investments that potentially impact quality. We also find some suggestive evidence that unions may compromise quality by hurting employee morale and by resisting technological upgrades in the firm. Overall, our results suggest that unions have an adverse impact on product recalls, and thus, product quality is an important dimension along which unions impact businesses. This paper was accepted by Gustavo Manso, finance.

Pengaruh Profitabilitas, Busines Risk, Growth of Assets, Operating Leverage terhadap Struktur Modal

Business competition today makes many companies strive to achieve their main goals. Maximizing company value is one of the main goals of every company. Maximizing company value by fulfilling company funds that come from internal and external sources of the company. Determination of the proportion of long-term debt and capital in its use as a source of a company has a company that is closely related to the capital structure. This study aims to see the effect of profitability, business risk, asset growth, operating leverage on the capital structure of manufacturing companies listed on the Indonesia Stock Exchange for the 2015-2019 period. This type of research is quantitative. The population used in this study are manufacturing companies listed on the Indonesia Stock Exchange (IDX) with a sample size of 170 samples using purposive sampling method. The analysis was performed using multiple regression models. The results of this study indicate that: (1) Profitability has a negative and significant effect on capital structure (2). Business risk has a negative and insignificant effect on capital structure (3) Asset growth has a positive and insignificant effect on capital structure (4) Operating leverage has a negative and insignificant effect on capital structure

Faktor yang Mempengaruhi Struktur Modal pada Perusahaan Makanan dan Minuman Tbk

The research aims to analyze the influence of the investment opportunity set, profitability and operating leverage on the capital structureof food and beverage companies listed on the Indonesian Stock Exchange for the 2014-2018 period. Determination of samples using purposive sampling with criteria namely food and beverage companies listed on the Indonesian Stock Exchange and those who publish financial statements in a row during the 2014-2018 period, obtained 10 companies that meet the criteria and 5 years of observation to produce 50 samples. The results of the study indicate that the investment opportunity set variable in a negative and not significant effect on capital structure with a significance value of 0,129> 0,05, profitability in a positive and significant effect on capital structure with a significane value of 0,031< 0,05 and operating laverage in a prsial positive and significant effect on capital structure with a significance value of 0,030< 0,05. Investment opportunity set, profitability and operating laverage simultaneously influence the capital structure with a significance value of 0,049 > 0,05. Investment opportunity set, profitability and operating laverage are able to explain the capital structure of 10,5% is expalined by other factors not included in this study.

Quantitative Analysis of Leverage Ratio on Earning-Per-Share of Property and Real Estate Sectors in Indonesia

Objectiveness of our study is expected to provide the several contributions: (1) Theoretical benefits, the results of this study are expected to contribute to the development of economics, especially financial science, as material for developing insight into financial performance through operating leverage and financial leverage on earnings per share (EPS). This research was conducted on the Indonesia Stock Exchange (IDX). The research time taken in carrying out and completing this activity is scheduled for 3 (three) months, from July to September 2020. The population in this study is the property and real estate sector companies listed on the Indonesia Stock Exchange (IDX) from 2017-2019, totaling 62 companies. The method of determining the sample in this study used purposive sampling. The result of this study showed operating leverage has a positive and significant effect on earnings per share, financial leverage has no effect and is not significant on EPS, operating leverage and financial leverage simultaneously have a positive and significant effect on earnings per share. Based on the results of our demonstration of the analysis and discussion, several suggestions are put forward e.g., before investing in any company, an investor needs to pay attention to the level of earnings per share.

Pengaruh Struktur.Modal, Operating Leverage, Financial Leverage, Dan Likuiditas.Terhadap Risiko Investasi Saham Pada Perusahaan Sub Sektor Restoran, Hotel Dan Pariwisata Di Bei Periode 2017-2019

Penelitian ini berjudul Pengaruh .Struktur Modal, Operating.Leverage, Financial Leverage dan Likuiditas .Terhadap Risiko Investasi Saham.Pada Perusahaaan Sub Sektor.Restoran, Hotel, dan.Pariwisata di BEI Periode 2017-2019. Risiko Investasi Saham tidak akan pernah terjadi jika prinsip-prinsip ekonomi tetap sejalan artinya setiap pelaku pasar meningkatkan pengorbanan yang seinimal mengikuti untuk mendapataan kegunakaan yang maksimal. Penelitian terhadap risiko investasi dan faktor yang mempengaruhi sangat penting dilakukan sehinggaakan membantu investor dan mengambil keputusan untuk berinvestasi. Penelitian memiliki tujuan untuk mengetahui secara persial struktur.modal, operating.leverage, financial leverage, dan likiditas terhadap.risiko investais saham pada perusahaan sub sektor restoran, hotel, dan pariwisata di Bursa Efek Indonesia.(BEI) periode 2017-2019. Teknik.pengambilan sampel yang digunakan adalah purposive sampling dan memperoleh total sampel.yang telah memenuhi.kriteria sebanyak 16 perusahaan dengan jumlah 35 perusahaan terpilih. Berdasarkan sumber data.yang dipergunakan dalam.penelitian ini.semuanya ialah.data sekunder, yaitu.dengan mengakses Website Bursa Efek.Indonesia. Teknik analisis.data yang digunakan pada penelitian ini ialah analisis regresi.linier berganda. Struktur.modal berpengaruh.positif terhadap.risiko investasi saham, Operating leverage tidak berpengaruh.terhadap risiko investasi.saham, Financial leverage berpengaruh positif.terhadap risiko investasi.saham, dan Likuiditas.berpengaruh positif terhadap risiko investasi saham pada perusahaan sub sektor retoran, hotel, dan pariwisata di Bursa efek Indonesia.