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Questions and Answers
What is the formula to calculate operating leverage?
What is the formula to calculate operating leverage?
Operating Leverage = Contribution Margin / Operating Income
How do you calculate financial leverage?
How do you calculate financial leverage?
Financial Leverage = 1 + (Debt / Equity)
Define the degree of operating leverage.
Define the degree of operating leverage.
Degree of Operating Leverage (DOL) = % Change in EBIT / % Change in Sales
Explain the formula for combined leverage.
Explain the formula for combined leverage.
Calculate the degree of operating leverage for Firm A.
Calculate the degree of operating leverage for Firm A.
What is the impact of a high degree of operating leverage on a company?
What is the impact of a high degree of operating leverage on a company?
Calculate the degree of financial leverage for Firm B.
Calculate the degree of financial leverage for Firm B.
Calculate the degree of combined leverage for Firm C.
Calculate the degree of combined leverage for Firm C.
Calculate the firm's ROI.
Calculate the firm's ROI.
Does the firm have favorable financial leverage?
Does the firm have favorable financial leverage?
If the firm's asset turnover is 2, does it have high or low asset leverage?
If the firm's asset turnover is 2, does it have high or low asset leverage?
Calculate the operating leverage for the firm.
Calculate the operating leverage for the firm.
Calculate the financial leverage for the firm.
Calculate the financial leverage for the firm.
Calculate the combined leverage for the firm.
Calculate the combined leverage for the firm.
If sales drop to Rs. 125 lakhs, what will be the new EBIT for the firm?
If sales drop to Rs. 125 lakhs, what will be the new EBIT for the firm?
At what level will the EBT of the firm be equal to zero?
At what level will the EBT of the firm be equal to zero?
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