Results & Analysis

Descriptive Statistics.

1. BSE - 200 Companies.

Parameter	Mean	Median	Max	Min	Std Dev	Variance
Leverage	0.23	0.23	0.78	0	0.19	0.04
Size	7.51	7.5	12.71	-1.56	1.66	2.76
Profitability	0.12	0.1	0.88	0	0.11	0.1
Tangibility	0.36	0.35	0.94	0	0.22	0.05
RoA	0.94	0.77	7.5	0	0.77	0.59
R&D Expense Ratio	0.01	0	0.26	0	0.02	0
Mktg. Expense Ratio	0.03	0.02	0.29	0	0.04	0

2. MSME Sector Companies.

Parameter	Mean	Median	Max	Min	Std Dev	Variance
Leverage	0.51	0.13	153	0	4.09	16.53
Size	0.99	1.38	7.52	-4.61	2.03	4
Profitability	-0.03	0.01	13	-27.62	0.7	0.48
Tangibility	0.26	0.2	1	0	0.24	0.5
RoA	1.15	0.68	206.67	0	3.8	14.4
R&D Expense Ratio	0	0	1.94	0	.03	0
Mktg. Expense Ratio	.03	0	5	0	.13	.02

Regression Analysis.

1. BSE - 200 Companies

Parameter	Coefficients	Std. Error	t-stat	P-Value
Leverage	.22	.02	10.61	0
Size	0	0	1.21	0.22
Profitability	-.79	.04	-21.8	0
Tangibility	-.79	.04	-21.8	0
RoA	.39	.02	20.88	0
R&D Expense Ratio	-.12	.18	-.66	.51
Mktg. Expense Ratio	-.1	.02	-5.63	0

2. MSME Sector Companies

Parameter	Coefficients	Std. Error	t-stat	P-Value
Leverage	.4	.11	3.78	0
Size	-.28	.03	-10.78	0
Profitability	-1.68	.07	-23.84	0
Tangibility	-0.09	.22	-.39	.7
RoA	.39	.01	28.98	0
R&D Expense Ratio	-1.04	1.41	-0.74	.46
Mktg. Expense Ratio	-.2	.37	-.52	.6

3. Model Statistics

Statistic	BSE-200	MSME
Multiple R	.72	.64
R-square	.61	.52
Adjusted R-square	.61	.52
Standard Error	.13	3.68
Observations	1263	5622

4. Comparison of observed and theoretical standards of the effect of variables on leverage.

Theoretical Standards.

Independent Variable	Definition	Effect on Leverage
Tangibility	Net FA/Total Assets	Positive
Profitability	PBT/Total Assets	Negative
Size of the Firm	Log(Sales)	Positive
R&D Expense Ratio	R&D Expense/Sales	Positive
Mktg. Expense Ratio	Mktg. Expense/Sales	Negative

Observed Relationship

Independent Variable	BSE-200	MSME
Tangibility	Positive	Negative
RoA	Negative	Negative
Profitability	Positive	Negative
Size of the Firm	Negative	Positive
R&D Expense Ratio	Negative	Negative
Mktg. Expense Ratio	Positive	Negative

Analysis

The relationship of the debt to equity ratio with pre-defined factors was observed for each of the two categories was established as per the regression results. It was identified that the relationship of the Leverage ratio for BSE 200 companies was in accordance with the assumption made about the same whereas the leverage ratio for MSME companies across sectors followed a significantly different trend. Though factors like size of the firm, tangibility of the asset, return on assets, R&D expense ratio and marketing expense ratio had different relationship with leverage ratio for different sectors, profitability stood as one of the factors that always maintained a negative relationship with leverage ratio. Also from above we can conclude that in MSME Sector, size of the firm, profitability and marketing expense ratio always maintained a negative relationship with leverage ratio.