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  • Name:-Akash Santosh Shinde. Class: - Ty Bms DIV: - A ROLL NO:-202

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    This document contains information about a student named Akash Santosh Shinde from the TY BMS division of class A with roll number 202. It then discusses the importance of leverage, including how it magnifies returns to shareholders, examines changes in profits from sales, and helps determine increases or decreases in profits from fixed operating and financial costs. Finally, it differentiates between operating leverage and financial leverage, noting things like their objectives, the stage of earnings they affect, their relationship to assets/liabilities, and the types of risks they deal with.

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    finance management

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    FM

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    This document contains information about a student named Akash Santosh Shinde from the TY BMS division of class A with roll number 202. It then discusses the importance of leverage, including how it magnifies returns to shareholders, examines changes in profits from sales, and helps determine increases or decreases in profits from fixed operating and financial costs. Finally, it differentiates between operating leverage and financial leverage, noting things like their objectives, the stage of earnings they affect, their relationship to assets/liabilities, and the types of risks they deal with.

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    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
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    7 views3 pages

    Name:-Akash Santosh Shinde. Class: - Ty Bms DIV: - A ROLL NO:-202

    Uploaded by

    Akash2711
    This document contains information about a student named Akash Santosh Shinde from the TY BMS division of class A with roll number 202. It then discusses the importance of leverage, including how it magnifies returns to shareholders, examines changes in profits from sales, and helps determine increases or decreases in profits from fixed operating and financial costs. Finally, it differentiates between operating leverage and financial leverage, noting things like their objectives, the stage of earnings they affect, their relationship to assets/liabilities, and the types of risks they deal with.

    Copyright:

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    Download as DOCX, PDF, TXT or read online from Scribd
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    NAME CLASS DIV

    :- Akash Santosh Shinde. :- TY BMS :- A

    ROLL NO :-202

    IMPORTANCE OF LEVERAGE
    1 Leverages indicates the ability of the firm to use fixed cost assets or fixed cost funds to magnify the returns to its shareholders. 2 Leverages helps in examining a relative change in the profits due to change in the sales. 3 Leverages helps in determining the increase or decrease in profits that occurs on account of fixed operating cost as well as fixed Financial cost. 4 Leverages helps in bifurcating the fixed costs into fixed operating cost and fixed financial costs and thus examine its impact on the profit of the firm at differently. 5 Leverages helps in determining the Earnings per share (EPS) of the company.

    DIFFERENCE BETWEEN OPERATING LEVERAGE AND FINANCIAL LEVERAGE.


    OPERATING LEVERAGE
    1 The objective of operating leverage is to magnify the effect of changes in sales on EBIT. 2 It is known as first stage Leverage. 3 It affects earnings before interest and tax 4 It relates with Investment decisions. 5 It relates with to the Assets side of the Balance sheet. 6 It deals with Operating risk of being unable to cover fixed operating cost

    FINANCIAL LEVERAGE
    1 The objective of financial leverage is to magnify the effect of changes in EBIT on EPS. 2 It is known as second stage Leverage. 3 It affects earnings after interest and tax 4 It relates with Financing decisions. 5 It relates with to the Liabilities side of the Balance sheet. 6 It deals with Financial risk of being unable to cover fixed operating cost

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