Peterson Cole
08/28/2023 · Senior High School

5. Annual sales of a company is Rs. \( 60,00,000 \). Sales to variable cost ratio is \( 150 \% \) and fixed cost other than interest is Rs. \( 5,00,000 \) p.a. Company has \( 11 \% \) debentures of Rs. \( 30,00,000 \). i) Calculate the operating, financial and combined leverage of the company. ii) If sales amount is increased by \( 10 \% \), by what percent EBIT will increase?

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i) Operating Leverage (OL) ≈ 1.33, Financial Leverage (FL) ≈ 1.28, Combined Leverage (CL) ≈ 1.70 ii) If sales increase by 10%, EBIT will increase by approximately 13.33%.

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