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Well Established Company's most recent balance sheet is as follows: Liabilities Equity @Rs 10 per share Amount Rs. 60000 Net fixed assets 10% Long term debt 80000 Current assets Amount Rs. 150000 50000 Retained Earnings 20000 Current liabilities 40000 Total 200000 Assets Total 200000 Total asset turnover ratio is 3, its fixed operating costs are Rs.1,00,000 and the variable operating costs ratio is 40%. The income tax rate is 35%. Calculate all types of leverages and interpret them.

Well Established Company's most recent balance sheet is as follows: Liabilities Equity @Rs 10 per share Amount Rs. 60000 Net fixed assets 10% Long term debt 80000 Current assets Amount Rs. 150000 50000 Retained Earnings 20000 Current liabilities 40000 Total 200000 Assets Total 200000 Total asset turnover ratio is 3, its fixed operating costs are Rs.1,00,000 and the variable operating costs ratio is 40%. The income tax rate is 35%. Calculate all types of leverages and interpret them.

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Well Established Company's most recent balance sheet is as follows: Liabilities Equity @Rs 10 per share Amount Rs. 60000 Net fixed assets 10% Long term debt 80000 Current assets Amount Rs. 150000 50000 Retained Earnings 20000 Current liabilities 40000 Total 200000 Assets Total 200000 Total asset turnover ratio is 3, its fixed operating costs are Rs.1,00,000 and the variable operating costs ratio is 40%. The income tax rate is 35%. Calculate all types of leverages and interpret them.
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