Impact of Financial Leverage Variability on Economic Value Added: A Relational Model to Visualize Sustainable Growth of Business in the Long Run

Abstract

EVA is a performance tool that aims to assess the value added to the economy. The genuine financial profit generated by a business. Such a measure is important for investors who seek to assess a firm's performance. Company has generated value for its shareholders, and it may be linked to its competitors for a rapid examination of how much value it has generated. Economic value addition is one of the independent variables included in the study; this is because it serves as an evaluation tool for determining the research's ultimate conclusion about the financial performance. Maximisation of EVA (which measures a firm's ability to generate profits over and beyond those needed to maintain its operations) is seen as the greatest strategy to do this capital. Firms with fixed expenses and a need for access to economy, long-term financing have seen an increase in the amount of leverage they can use. The data was analyzed using standard statistical methods including correlation coefficient in addition to Mean and SD and multiple linear regression analysis. The outcomes indicate that the negative association among financial leverage and EVA is larger than the negative connection between financial performance measures including such ROE and ROA, which have a lesser correlation with one another than financial leverage and EVA.