Question

An Analytical statement of AB Ltd is as follows. It is based on an output (Sales) level of

80000 units



Rs

Sales 960000

( - ) Variable Cost 560000

Contribution 400000

( - ) Fixed Cost 240000

EBIT 160000

( - ) Interest 60000

Earning Before Tax 100000

( - ) Tax 50000

Earning After Tax 50000

Calculate: - 1) Operating Leverage

2) Financial Leverage

3) Combined Leverage​

Answer 1

Answer:

An Analytical statement of AB Ltd is as follows. It is based on an output (Sales) level of

80000 units

Rs

Sales 960000

( - ) Variable Cost 560000

Contribution 400000

( - ) Fixed Cost 240000

EBIT 160000

( - ) Interest 60000

Earning Before Tax 100000

( - ) Tax 50000

Earning After Tax 50000

Calculate: - 1) Operating Leverage

2) Financial Leverage

3) Combined Leverage