Financial Management basically deals with raising of financial resources and its proper allocation in order to maximize shareholders wealth. For a successful running of an organization fixed and current assets play a crucial role as organization generally invests in these options. A firm's working capital consists of its investments in short-term assets like cash and bank balance, inventories, receivable and short-term investments. Therefore, the working capital management mainly refers to the management of all these individual current assets. In this research paper an attempt has been made to study the components of financial leverage and the possible implications of financial leverage on financial performance of selected steel companies of India. The paper also attempts to analyse the correlation between liquidity, profitability and return on investments of selected steel companies. The study is based on secondary data collected from annual reports of selected 5 steel companies for the period 2007-08 to 2016-17. In this paper there is an application of regression analysis to identify the significant impact of financial leverage on the financial performance. Financial leverage is essential as it might have a direct impact on profitability and liquidity.

Keywords: Financial Leverage, Liquidity, Steel Companies, Financial Performance.