Following is the Balance Sheet of MA Equipment Ltd. Balance Sheet Liabilities Equity capital (Rs.10 per...

Transcribed Image Text:

Following is the Balance Sheet of MA Equipment Ltd. Balance Sheet Liabilities Equity capital (Rs.10 per share) Retained earnings Assets Fixed assets Current assets Rs. 60,000 20,000 10% Debt 80,000 Current liabilities 80,000 The firm had Fixed Assets turnover of 4, the fixed operating costs are Rs.100,000, variable costs are 40% and a tax rate of 50%. Find out: Different Leverages for the firm; Likely level of EBIT if the EPS is (a) Rs.1; (b) Rs.3; Financial break-even level. m Rs. 150,000 90,000 The following information is available for ABC & Co. EBIT Rs.1120,000 Profit before Tax Rs.320,000 Fixed costs Rs.700,000 Calculate percent change in EPS if the sales are expected to increase by 5%. Following is the Balance Sheet of MA Equipment Ltd. Balance Sheet Liabilities Equity capital (Rs.10 per share) Retained earnings Assets Fixed assets Current assets Rs. 60,000 20,000 10% Debt 80,000 Current liabilities 80,000 The firm had Fixed Assets turnover of 4, the fixed operating costs are Rs.100,000, variable costs are 40% and a tax rate of 50%. Find out: Different Leverages for the firm; Likely level of EBIT if the EPS is (a) Rs.1; (b) Rs.3; Financial break-even level. m Rs. 150,000 90,000 The following information is available for ABC & Co. EBIT Rs.1120,000 Profit before Tax Rs.320,000 Fixed costs Rs.700,000 Calculate percent change in EPS if the sales are expected to increase by 5%.

Answer rating: 100% (QA)

To calculate the different leverages for the firm well use the following formulas 1 Degree of Operating Leverage DOL Contribution Margin Operating Pro... View the full answer