question archive The following data is available for XYZ Ltd
The following data is available for XYZ Ltd
Subject:AccountingPrice: Bought3
The following data is available for XYZ Ltd.
Sales Rs.2, 00,000
-variable cost 60,000
Contribution 1, 40,000
Fixed cost 1, 00,000
EBIT 40,000
-Interest 5,000
PBT 35,000
Find out:
(i) Using the concept of financial leverage, by what % will the taxable income increase if EBIT increases by 6%.
(ii) Using the concept of operating leverage, by what % will the EBIT increase if there is 10% increase in sales, and
(iii) Using the concept of combined leverage by what % will the taxable income increase if the sales increase by 6%.
