A Study on the Effects of Cost of Capital on Profitability with Special Reference to Keltron Equipment Complex, Thiruvananthapuram

Abstract

The effect of cost of capital on Profitability is the focal point of this study with a detailed analysis on KELTRON Equipment Complex, Thiruvananthapuram. The study period is five years ranging from 2019 to 2023 and secondary data has been obtained from the company’s audited annual report and financial statement. A descriptive and analytical research design have been used. The data analysis is done using financial tools such as cost of capital analysis (cost of debt, cost of equity and WACC calculations), ratio analysis and trend analysis. The results indicate that significant changes in the capital structure of the company took place during the period of the study, which shifted from dependence on debt funds towards the dominance of equity funds. The weighted average cost of capital (WACC), although somewhat volatile, dropped significantly in 2023, underscoring the increased cost efficiency. The overall profitability trend was improving, notably improving since 2022, indicating improved asset utilization and better operational efficiency.