Leverage ; Prof Shezad Lalani (M.com,GDCA, ACMA, PGDFM,SET,CS inter) TYBAF & TYBBI 1 v ‘ Problem No. 1] Prepare the income statement and calculate the degree of operating leverage, degree of financial leverage, and the degree of combined leverage for the following companies: | Company P Q Output (units) 3,00,000 75,000 / Fixed costs (@) 350,000 7,00,000 Unit variable cost (@) 1,00 7.50 / Interest expenses (®) 25,000 40,000 Unit selling price (&) 3.00 25.00 , Applicable tax rate is 35%. R 5,00,000 75,000 0.10 25,000 0.502 Problem N&2]A company has sales of | lakh, The variable costs are 40% of the sales while the fixed operating costs amount to% 30,000. The amount of interest on long-term debts is 10,000. You are required to calculate the combined leverage and illustrate vs impact if sales increase by 5%,3 Problem of 3) The capital structure of a company consists of the following securities. z 10% Preference Share Capital 1,00,000 , Equity Share Capital (¥ 10 Shares) 1,059,000 12% Debenture 75,000 The amount of operating profit is ¥ 69,000. The company is in 35% tax bracket. You are required to calculate the financial leverage of the company.