The Leverage Degrees of Companies Traded in Istanbul Stock Exchange

Abstract

The profitability of companies is related to the items of balance sheet and inco- me statement. The most important consideration for maximizing profit of companies is op- timization of these items composition. Undoubtedly, sales and financial costs constitute the most outstanding items in this composition. The historical performance of this two items which have a functional relationship to each other could be used to forming compa- nies’future profitability. In finance literature, the top of the tools using to measure com- panies performance is the leverage mechanism. Operational Leverage, Financial Levera- ge and Combined Leverage which is combined from Operational and Financial Leverage have an important function for measuring the financial potential of companies. In this ar- ticle, leverage degrees of trading companies at IMKB are calculated in details of firms, industries, and IMKB, and analysed in the basis of industries. As a result, we have tried to determine relationships among the leverage degrees, industrial tendencies and macro economic fluctuations, and finally we have tried to reach general conclusions.Finance Leverage, Operational Leverage, Ratio Analysis, Industrial Analysis.