Research methodologyMultiple regres

Research methodology

Multiple regression analysis has been used, satisfying all its

five assumptions i.e. the Normality Assumption Test, the

Homoscedasticity Assumption Test, the Linearity Assump-
tion Test of each of the independent variables with the

dependent variable, the DurbineWatson d Statistic Test for

detecting serial correlation and the Multicollinearity Test in

174 A. Handoo, K. Sharma

Cost of debt (COD): Cost of debt is the effective rate

that a company pays on its current debt. This can be

measured by either before- or after-tax returns. Since in-
terest expense is deductible, the after-tax cost is seen most

often. This is one part of the company’s capital structure,

which also includes the cost of equity. The measure of cost

of debt in the study is using interest before tax/long term

debt.

Liquidity (LIQ): Liquidity is the ability to convert an

asset to cash immediately. It is also known as “market-
ability”. Liquidity was calculated by dividing the total

current assets by the total current liabilities.

Financial distress (FINDIST): Financial distress is a

condition where a company has difficulty paying off its

financial obligations to its creditors. The chance of financial

distress increases when a firm has revenues that are sen-
sitive to economic downturns, high fixed costs or illiquid

assets. Volatility (standard deviation) of a firm’s cash flow is

used for the firm’s observable risk and the probability of

financial distress (S. Narayan Rao and Jijo Lukose P. J.

(2001)).

Tax rate (TAXR): Tax rate is a rate placed depending on

the profit of a firm; different rates are used for different

levels of profits. Corporate taxes are usually levied by all

levels of government (i.e. state and country). Tax rate can

be measured for each company by dividing its tax provision

by profit before tax.

Debt serving capacity (DSC): A high debt service ca-
pacity means that the firm can meet its interest obligation

even if EBIT suffers a considerable decline. In other words,

the higher the debt coverage, the greater is the likelihood

of a firm having a higher debt component in its financial

structure. So, the capacity of a firm to borrow will be

directly proportional to its ability to honour its fixed pay-
ment obligation. Hence, higher the capacity of the com-
pany to service debt, the greater is the likelihood of the

debt ratio being higher. The study proxies for debt with the

ratio between profit before depreciation, interest and

taxes to total interest.

Kết quả (Việt) 1:

Research methodologyMultiple regression analysis has been used, satisfying all itsfive assumptions i.e. the Normality Assumption Test, theHomoscedasticity Assumption Test, the Linearity Assump-tion Test of each of the independent variables with thedependent variable, the DurbineWatson d Statistic Test fordetecting serial correlation and the Multicollinearity Test in174 A. Handoo, K. SharmaCost of debt (COD): Cost of debt is the effective ratethat a company pays on its current debt. This can bemeasured by either before- or after-tax returns. Since in-terest expense is deductible, the after-tax cost is seen mostoften. This is one part of the company’s capital structure,which also includes the cost of equity. The measure of costof debt in the study is using interest before tax/long termdebt.Liquidity (LIQ): Liquidity is the ability to convert anasset to cash immediately. It is also known as “market-ability”. Liquidity was calculated by dividing the totalcurrent assets by the total current liabilities.Financial distress (FINDIST): Financial distress is acondition where a company has difficulty paying off itsfinancial obligations to its creditors. The chance of financialdistress increases when a firm has revenues that are sen-sitive to economic downturns, high fixed costs or illiquidassets. Volatility (standard deviation) of a firm’s cash flow isused for the firm’s observable risk and the probability oftài chính gặp nạn (S. Narayan Rao và Jijo Lukose P. J.(2001)).Thuế suất (TAXR): thuế suất là một tỷ lệ đặt tùy thuộc vàolợi nhuận của công ty; mức độ khác nhau được sử dụng cho khác nhaumức độ lợi nhuận. Thuế doanh nghiệp thường được áp dụng bởi tất cảcấp chính quyền (tức là tiểu bang và quốc gia). Tỷ lệ thuế có thểđược đo cho mỗi công ty bằng cách chia của nó cung cấp thuếbởi lợi nhuận trước thuế.Nợ phục vụ công suất (DSC): một nợ cao dịch vụ ca -pacity có nghĩa là các công ty có thể đáp ứng nghĩa vụ quan tâm của mìnhthậm chí nếu EBIT bị một sự suy giảm đáng kể. Nói cách khác,cao hơn nợ bảo hiểm, lớn hơn là khả năngcủa một công ty có một thành phần nợ cao của nó tài chínhcấu trúc. Vì vậy, năng lực của một công ty cho vay sẽtỷ lệ thuận với khả năng của mình để tôn vinh các trả tiền cố định-ment nghĩa vụ. Do đó, cao công suất com -pany dịch vụ nợ, lớn hơn là khả năng của cáctỷ lệ nợ cao hơn. Các nghiên cứu proxy cho các món nợ với cáctỷ lệ giữa lợi nhuận trước khi khấu hao, lãi suất vàthuế đến tất cả các lợi ích.