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ZENITH International Journal of Multidisciplinary Research
Year : 2018, Volume : 8, Issue : 12
First page : ( 20) Last page : ( 35)
Online ISSN : 2231-5780.

A comparison of the finance costs of the e-retail companies and the retail companies listed in nasdaq

Viswam Sonia1, Dr Zohair Mohammad2

1Phd Scholar in Financial Management, Department of Business Studies, Central University of Karnataka, Gulbarga. soniaviswam11@gmail.com

2Assistant Professor Central University of Karnataka

Online published on 23 January, 2019.

Abstract

The e-retail sector is growing day by day. But the longevity of the e-retail companies is not assured. Most of them are short lived. In the context of Flipkart the finance costs contribute to the major share of the expenses. So the researcher tries to find out whether the finance costs and the related capitalisation are same for the e-retail sector and the retail sector. The paper finds that there is no significant difference between the interest expenses of the e-retail firms and the traditional retail firms. But the capitalisation of interest cost is practically nil for the e-retail companies whereas the traditional retail companies capitalise their interest cost. So their debts are leading to future economic benefits. At the same time the Research and Development expenses are nil for the traditional retail sector. But the Research and Development expenses are contributing significantly in the case of e-retail companies. This may affect the competitive advantage of the traditional retail companies. At the same time this will add to the expenses of the e-retail companies.

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Keywords

Finance costs, capitalisation, capital structure, R & D.

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