Financial Statement Analysis of Rane Steering Systems Pvt. Ltd through Leverage and Employee Costing

Abstract: The financial statements using leverage and employee costs is essential in evaluating the financial health of an organization. The analysis assists the stakeholders in evaluating the organizations stability, operational effectiveness, and sustainability in the long run. A descriptive research design was employed to analyze the financial statements with a focus on leverage and employee cost. The study relied on secondary data collected from official company websites. Leverage was calculated over a five-year period from 2020 to 2025, including operating leverage, financial leverage, and combined leverage to assess the company's financial performance. Employee costs calculated for 5 years from 2020 to 2025 using both the time-hour rate and unit-rate methods, providing insights into labor-related expenditures. The objective of the study is to evaluate the trend of operating, financial, and combined leverage over a five-year period and understand their impact on the organization’s profitability. Profitability Insights: Losses in 2020 and 2021 at EBIT level due to high fixed and interest costs. Significant turnaround from 2022 onwards, with positive and rising EBIT, EBT, and EAT figures—indicating improving financial health and operational efficiency. The study Recent trends show a strategic focus on sustainable growth with balanced risk. Overall, the company maintained a cautious yet effective use of leverage.