Question 5 A company had the following balance sheet as on 31 March, 2021: Liebilities in Crores Assets 7.50 Building ein Crores Equity Share Capital (75 lakhs Shares of 10 each) Reserves and Surplus 12.50 1.50 Machinery 15.00 Current Assets 6.00 Stock 6.25 15% Debentures Current Liabilities 3.00 Debtors 3.25 5.00 Bank Balance 30.00 30.00 The additional information given is as under: Fixed cost per annum (excluding interest) 76 crores Variable operating cost ratio 60% Total assets turnover ratio 2.5 Income-tax rate 40% Calculate the following and comment: () Earnings per share (i) Operating Leverage (ii) Financial Leverage (iv) Combined Leverage

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

Please explain all parts if possible otherwise first three parts

Question 5
A company had the following balance sheet as on 31t March, 2021:
Liebilities
in Crores Assets
7.50 Building
in Crores
Equity Share Capital (75 lakhs Shares of
10 each)
Reserves and Surplus
12.50
1.50 Machinery
15.00 Current Assets
6.00 Stock
6.25
15% Debentures
Current Liabilities
3.00
Debtors
3.25
Bank Balance
5.00
30.00
30.00
The additional information given is as under:
Fixed cost per annum (excluding interest)
76 crores
Variable operating cost ratio
60%
Total assets turnover ratio
2.5
Income-tax rate
40%
Calculate the following and comment:
(1) Earnings per share
(i) Operating Leverage
(ii) Financial Leverage
(iv) Combined Leverage
Transcribed Image Text:Question 5 A company had the following balance sheet as on 31t March, 2021: Liebilities in Crores Assets 7.50 Building in Crores Equity Share Capital (75 lakhs Shares of 10 each) Reserves and Surplus 12.50 1.50 Machinery 15.00 Current Assets 6.00 Stock 6.25 15% Debentures Current Liabilities 3.00 Debtors 3.25 Bank Balance 5.00 30.00 30.00 The additional information given is as under: Fixed cost per annum (excluding interest) 76 crores Variable operating cost ratio 60% Total assets turnover ratio 2.5 Income-tax rate 40% Calculate the following and comment: (1) Earnings per share (i) Operating Leverage (ii) Financial Leverage (iv) Combined Leverage
Expert Solution
steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Administration and Procedures
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education