Muffins LLC is a leading software solutions company in Oman, established in the year 2003. The company has branches in Dubai, Qatar and Malaysia. The company has received “the Malaysia best employer award” in the year 2020. Moreover, the company has reported 3% growth in their consolidated income during the first quarter of 2021. However, the internal auditing department of the company has raised concerns about the Business and financial risk of the companies. As a result, the board of directors has instructed Mr. Miras Ahmed to analyse the operating, financial and combined leverages of the company to take necessary steps to minimize the overall risk. Data Extracted from the financial reports of the companies are given below Item Amount / Quantity Sales 200,000 OMR Unit Sold 1000 Nos Variable cost 70 OMR Fixed Cost 30,000 OMR Interest Expenses 10,000 OMR Additional Information The corporate tax applicable for the previous assessment year was 30%. The fixed interest payments given is for the bank loan of 250,000 OMR taken at an interest rate of 4% per annum. Question Calculate Operating Leverage from the above given data?
Muffins LLC is a leading software solutions company in Oman, established in the year 2003. The company has branches in Dubai, Qatar and Malaysia. The company has received “the Malaysia best employer award” in the year 2020. Moreover, the company has reported 3% growth in their consolidated income during the first quarter of 2021. However, the internal auditing department of the company has raised concerns about the Business and financial risk of the companies. As a result, the board of directors has instructed Mr. Miras Ahmed to analyse the operating, financial and combined leverages of the company to take necessary steps to minimize the overall risk.
Data Extracted from the financial reports of the companies are given below
|
Item |
Amount / Quantity |
|
Sales |
200,000 OMR |
|
Unit Sold |
1000 Nos |
|
Variable cost |
70 OMR |
|
Fixed Cost |
30,000 OMR |
|
Interest Expenses |
10,000 OMR |
Additional Information
The corporate tax applicable for the previous assessment year was 30%. The fixed interest payments given is for the bank loan of 250,000 OMR taken at an interest rate of 4% per annum.
Question
Calculate Operating Leverage from the above given data?
1.8
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None of these
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