Question

एक्स क्यूब माइनस 1 स्क्वायर प्लस 3 एक्स माइनस 2 माइनस एक्स क्यूब माइनस टू एक्स स्क्वायर प्लस 1 प्लस 5 प्लस 3 माइनस 2 एक्स ​

Answer 1

Leverage and Capital Structure

1. A Ltd. has an average selling price of Rs. 10 per unit. Its variable unit costs are Rs.

7, and fixed costs amount to Rs. 1,70,000. It finances all its assets by equity funds. It

pays 50% tax on its income. B Ltd. is identical to A Ltd. except in respect of the

pattern of financing. The latter finances its assets 50% by equity and 50% by debt, the

interest on which amounts to Rs.20,000. Determine the degree of operating, financial

and combined leverages at Rs. 7,00,000 sales for both the firms, and interpret the

results.

Answer 2

Answer:

A company that pays for assets with more equity than debt has a low leverage ratio and a conservative capital structure. That said, a high leverage ratio and an aggressive capital structure can also lead to higher growth rates, whereas a conservative capital structure can lead to lower growth rates.

minatian~