LEVERAGE

Calculate the value of Degree in Operating Leverage (DOL)

• 0.18 times

• 1.18 times

• 2.18 times

• 2.88 times

Calculate the value of Degree in Operating Leverage for Company A and Company B

• Company A 2.67 times

  Company B 2.00 times

• Company A 2.27 times

  Company B 2.33 times

• Company A 2.77 times

  Company B 2.00 times

• Company A 2.87 times

  Company B 2.33 times

Degree in Financial leveragae for (i) , (ii) and (iii)

• 2.5, 3.4, 2

• 2.5, 4, 2

• 3.1 , 4 , 3

• 2.5, 2, 3

Following information are related to four firms of the same industry

Degree of Operating Leverage for Firm A is

• 0.12

• 1.23

• 0.93

• 1.33

Following information are related to four firms of the same industry

Degree of Combined Leverage for Firm A is

• 1.19

• 1.21

• 1.00

• 1.11

Calculate the Degree of Financial Leverage for the following firm.

• 2.31

• 2.45

• 2.50

• 2.67

Calculate the Degree of Operational Leverage for the following firm.

• 4.00

• 4.78

• 5.00

• 5.78

Calculate Degree of Combined Leverage from the following data:-

Sales 50,000 units @ RM 4 Per unit

Variable Cost per unit 40% from sales price

Fixed Costs Rm 100,000

Interest charges RM 3668

• 7.35

• 6

• 1.22

• 5.22

For sale at 20,000 units, company’s DOL is 5. If the sales increase by 27%, how much EBIT will increase?

• 120%

• 125%

• 130%

• 135%

The degree of combined leverage is

• The percentage change in sales divided by the percentage change in earnings per share

• The percentage change in earnings before interest and taxes divided by the percentages change in sales

• The degree of operating leverage divided by the degree of financial leverage

• The percentage change in earnings per share divided by the percentage change in sales