The share capital of a company is ₹ 1000000 with shares of face value of ₹ 10. The company has debt capital of ₹ 600000 at 10 % rate of interest. The sales of the firm are 300000 units per annum at a selling price of ₹ 5 per unit and the variable cost is ₹ 3 per unit. The fixed cost amounts to ₹ 200000. The company pays tax at 35 %. If the sales increases by 10 %, Calculate:
(a) Percentage Increase in EPS
(b) Degree of Operating Leverage at the two levels and
(c) Degree of Financial Leverage at the two levels.
Solution of the above mentioned problem was discussed and solved in the online session delivered on 31 Jul 2020.
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