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Essay / Research Paper Abstract
This 10 page paper takes data supplied by the student on a random sample of leisure and pharmaceutical companies and assess if there is any correlation between the level of earnings per share and the gearing level. Both industries are examines separately and the data is tested using a paired T-Test to test for any correlation. The bibliography cites 3 sources.
Page Count:
10 pages (~225 words per page)
File: TS14_TEepsgear.rtf
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Unformatted sample text from the term paper:
trace any potential link. If there are links this can help with analysis and the determination of potential future returns. This may also give the companies themselves insight into
the impact that certain changes may have. One area of concern is often that of the capital expenditure, which is represented in the gearing ratio. It is often cited
that where there is higher gearing there is higher risk, as such there is expected t be a higher return n line with the usual risk and reward equation where
risk attracts the need for a premium (Howells and Bain, 2004). If this is true then we might expect to see those with higher borrowing so creating more income taking
advantage of more opportunities with the increased level of capital (Elliott and Elliott, 2005). If this is the case ratios such as the earnings per share may be expected to
be higher and result in a correlation between the levels of the earning per share and the gearing. 2. The Data If we look at exploring this with the use
of a range of data we need to consider a random sampling of companies in order to assess the link. This will allow the two figures to be taken and
then assess. As there are different patterns in different industries we will choose two indicates and take a random sampling of the companies in each industry. The sampling in random
in order to avoid any type oaf bias towards well known companies or any companies of a specific size. If we argue the data into tables a cursory look,
when they are organised into order by earnings per share, low to high, does appear to indicate there may be a correlation between the EPS and the gearing ratio for
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