L.vijayakumar and D.Prabakaran
Financing decision refers to the selection of appropriate financing-mix and so it relates to the capital structure or leverage. Capital structure refers to the proportion of long- term debt capital and equity capital required to finance investment proposal. There should be an optimum capital structure, which can be attained by the judicious exercise of financial leverage. This study mainly concentrates on the exercise of leverage in the context understanding its impact on earnings per share. The purpose behind this study is to bridge the gap between theoretical and practical aspects. UCAL could not enjoy the benefit of accepted leverage theorem. Rather it accrued the benefit of EPS through the reverse operation of leverage. So leverage theorem is not a general rule. The dividend policy of the company is conservative. The company has been maintaining a decrease trend in the dividend payout. The company was enabling to maximize the EPS by reverse operation of financial leverage. The company successfully pulled down the degree of financial leverage to reap the EPS advantage.