Input-output Analysis: An Experience from Financing Mix Mechanism in Automobile Sector

Abstract

The present paper seeks to analyze the impact of financing mix on the net income or the earning per share (EPS) of the automobile company at the maximum level. It analyse changing the financing mix which means that changing the level of debts and into change in the level of debt affecting the interest payable by that firm. It is because higher the level of debt, higher would be the fixed obligation to honour the interest payments to the debt providers. Financing mix is a useful mechanism to increase the value of a firm. The mix of various types of debt and equity refers to financial mix of a firm. The more debt capital a firm has in its capital structure, the more highly leveraged the firm is considered to be. Decrease in interest would increase the net income and thereby the earning per share (EPS), and it is a general belief that the increase in EPS leads to increase in the value of the firm.