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Financial Analytics: Science and Experience
 

Operational, financial and tax leverages: interpretation and interrelation

Vol. 7, Iss. 40, OCTOBER 2014

Available online: 25 October 2014

Subject Heading: Financial management

JEL Classification: 

Pages: 35-44

Vlasova M.S. International Banking Institute, St. Petersburg, Russian Federation
vms68@yandex.ru

Laskina L.Yu. Institute of Refrigeration and Biotechnology, St. Petersburg National Research University of Information Technologies, Mechanics and Optics, St. Petersburg, Russian Federation
risk05@mail.ru

Importance The world financial and economic crisis, which has been developing since 2008, and which recently became acutely evident, changed not only the relationships between the economic subjects, but also caused the social, economic and institutional problems deterioration, and lead to the suspension of the earmarked investment to expand production. As a consequence, the development of methods and models, which not only take into account the manufacturing, financial and tax risks, but also enable to counter-balance them, is an essential condition of the entrepreneurship development in Russia; so the article's subject presents scientific and practical interests.
     Objectives The purpose of the study is to develop the methods to assess the tax leverage and identify its analogues with the established types of leverage - operational and financial ones. The different types of leverage serve as the subjects of the research.
     Methods In order to assess the operational, financial and taxation risk, we propose to use the operational, financial and tax leverages, respectively. We provide their comparison in terms of the interpretation of cover costs through the different income ratio, and fixed costs and profit ratio.
     Results We have identified that the analogy between all kinds of leverage when using the different techniques of their appraisal led to the comparable results, i.e. all kinds of leverages have declined, and that proves the increased enterprise sustainability.
     Conclusions and Relevance We emphasize that the practical value of the paper lies in the fact that all forms of the leverages are linked with enterprise sustainability, and it allows defining of the acceptable risk level.

Keywords: operational, financial, leverage, risk, tax, fixed costs coverage

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