From the information provided in the table (i) Calculate EBIT, Fixed Cost, Variable cost and Profit after tax for Company A and S as per financial data given below. (ii) Comment on the Operating and Financial risk for both the firms. Give reasons for your answer. Particulars A S Variable Expenses as a percentage of sales 75% 50% Interest Expense in Amount Rs. 300 1000 Degree of Operating Leverage 6 2 Degree of Financial Leverage 4 2 Income Tax Rate 35% 35%
From the information provided in the table (i) Calculate EBIT, Fixed Cost, Variable cost and Profit after tax for Company A and S as per financial data given below. (ii) Comment on the Operating and Financial risk for both the firms. Give reasons for your answer. Particulars A S Variable Expenses as a percentage of sales 75% 50% Interest Expense in Amount Rs. 300 1000 Degree of Operating Leverage 6 2 Degree of Financial Leverage 4 2 Income Tax Rate 35% 35%
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
From the information provided in the table
(i) Calculate EBIT, Fixed Cost, Variable cost and Profit after tax for Company A and S as per financial data given below.
(ii) Comment on the Operating and Financial risk for both the firms. Give reasons for your answer.
|
Particulars |
A |
S |
|
Variable Expenses as a percentage of sales |
75% |
50% |
|
Interest Expense in Amount Rs. |
300 |
1000 |
|
Degree of Operating Leverage |
6 |
2 |
|
Degree of Financial Leverage |
4 |
2 |
|
Income Tax Rate |
35% |
35% |
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 5 steps with 5 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education