Class Room Problems on Leverages

Problem 1: Calculate the Degree of Operating Leverage from the following data

Sales 1,00,000 Units @ Rs 2 per Unit

Variable Cost Per Unit Rs 0.70
Fixed Cost Rs 1,00,000

Problem 2: Calculate the Financial Leverage from following data

Sales 1,00,000 Units@ Rs 4 per unit

Variable Cost Per Unit Rs 1.40 per unit
Fixed Costs Rs 2,00,000
Interest Charges Rs 8,000

Problem 4: Calculate the financial Leverage under the following financial Plan
Particulars Plan A Plan B Plan C
Equity Share Capital 2,00,000 1,00,000 3,00,000
10% Debt Capital 2,00,000 3,00,000 1,00,000
Operating 40,000 40,000 40,000
Profit(EBIT)

Problem 5: Kumar company has sales of Rs. 25,00,000. Variable cost of Rs. 12,50,000 and fixed
cost of Rs. 50,000 and debt of Rs. 12,50,000 at 8% rate of interest. Calculate combined
leverage.

Problem 6: From the following information available for the four companies, calculate: (i)
EBIT; (ii) EPS;(iii) Operating leverage; (iv) Financial Leverage.
Particulars P Q R S
Selling Price Per Unit 15 20 25 30
Variable Cost per Unit 10 15 20 25
Quantity(No's) 20,000 25,000 30,000 40,000
Fixed Cost(Rs) 30,000 40,000 50,000 60,000
Interest(Rs) 15,000 25,000 35,000 40,000
Tax Rate(%) 40 40 40 40
No. of equity shares 5,000 9,000 10,000 12,000