2015 2016 2017 2018 2019

Particulars
Sales 6,659.99 8,014.35 6,612.96 6,854.87 8,217.87
PBITDA 859.21 1,823.76 898.76 1,168.34 1,362.70
Depreciation 138.66 134.4 120.51 140.49 152.61
EBIT 720.55 1689.36 778.25 1027.85 1210.09
EPS(In Rs) 6.17 20.82 7.91 10.57 12.56

Year 2015-16 2016-17 2017-18 2018-19

% change in Sales 20.34% -17.49% 3.66% 19.88%
% change in EBIT 134.45% -53.93% 32.07% 17.73%
% change in EPS 237.44% -62.01% 33.63% 18.83%
DOL 6.61171231821834 3.084309 8.767333 0.891697
DFL 1.76594824003121 1.149733 1.048527 1.061852
Combined Leverage 11.6759417319503 3.546131 9.192788 0.946851

DOL DFL
2
10
1.8
9
1.6
8
7 1.4
6 1.2
5 1
4 0.8
3 0.6
2 0.4
1 0.2
0 0
2015-16 2016-17 2017-18 201
2018-19 201 201 201
 Operating Leverage: Degree of Operating leverage indicates the operating risk that is
prevailing. For the year 2016-17 although there is a drop in sales, the leverage also
decreases as the cost of raw materials (Variable cost) have started to become major
part of the operating expenses. For the next year (17-18) the operating leverage
increases despite small chnage in sales which has translated to a higher percentage
change in EBIT.for the year 2018-2019 the increase in sales has contributed to
reduction of operating leverage. Financial Leverage

Financial Leverage: Degree of financial leverage indicates the financial risk. It is

directly proportonal to the interest expense. The ratio of change in EPS to change in
EBIT is almost consistent after 2015-2016. it is noted that the company has reduced
its debt after 2016 significantly which has led to less interest expenditure.

Combined Leverage:The combined leverage shows the total effect of operating and
financial leverage,it is calculated by multyplying DOL and DFL. It shoes total risk
associated with the company. Since the DFL is consistent for the last 3 years, the
major chnage in combined leverage is due to the effect of oerating leverage.

Combined Leverage
14

12

10

2
201
0
2015-16 2016-17 2017-18 2018-19
 Financial Data (In Crores)
Particulars 2015 2016 2017 2018 2019
Sales 5231.14 5764.65 6098.28 6444.75 7152.55
PBITDA 607.5 631.7 833.93 872.79 827.27
Depreciation 27.06 26.34 24.45 24.35 23.98
EBIT 580.44 605.36 809.48 848.44 803.29
EPS(In Rs) 11.62 11.7 15.64 17.3 15.35
(Data has been taken from CMIE Prowess)
Year % change in Sales % change in EBIT % change in EPS DOL DFL
2015-16 10.20% 4.29% 0.69% 0.421 0.161
2016-17 5.79% 33.72% 33.68% 5.824 0.999
2017-18 5.68% 4.81% 10.61% 0.847 2.206
2018-19 10.98% -5.32% -11.27% -0.484 2.118

DOL DFL Combined Leverag

2.205821205 2.118421052 5.816925734
5.823834196 02418
89119 82121 63158

0.998813760 1.867957746
379597 47887
0.846830985 0.067647058
0.420588235 915493 0.160839160 8235320
294118 - 20 20
0.484403362 839161
2015-16 2016-17 2017-18 2018-19
531789 2015-16 2016-17 2017-18 2018-19
 VOLTAS LTD.
LEVERAGE ANALYSIS
DEGREE OF OPERATING LEVERAGE:
Starting with the operating Leverage, we see that it has increased in the year 201
as compared to 2015-16 and then decreased in 2017-18 and further decreased in
2018-19.
During the period 2016-17 it can be inferred from the financial statement that ,
Combined Leverage although there has been a significant increase in company’s operating expenses ,
0.068 increase in company’s variable costs (Raw Material Consumed & Power , fuel , W
Charges , etc.) is not that significant. This clearly indicates that increase in compa
5.817 fixed cost (in this case it is outsourced professional jobs) has translated into such
1.868 increase in operating expenses which in turn has led to higher operating leverage
-1.026 During the period 2017-18 , it can be seen that , although sales of company have
increased by 5.68% , but the EBIT has increased by only 4.81% , thereby leading t
drastic fall in degree of operating leverage.
During the period 2018-19 , it can be inferred from the financial statement of the
Combined Leverage company that , although sales have increased by 10.98% , but at the same time t
5.816925734
has been a significant increase in company’s operating expenses , clearly indicati
02418 high percentage of variable costs to total operating expenses. This increase in
operating expenses has led to a significant decreases in company's EBIT thereby
leading to negative operating leverage.
DEGREE OF FINANCIAL LEVERAGE:
1.867957746 Degree of financial leverage has increased during the period 2015-16 , 2016-17 ,
47887 2017-18 , but has decreased during the period 2018-19.
0.067647058 From the financial statements it can be clearly inferred that Degree of financial
8235320 20 20 - 20 Leverage is dependent on EPS. During the period 2015-16 change in EPS is much
1.026170281 when compared to change in EBIT.It is almost same in the period 2016-17 , there
15287
financial leverage is close to 1 for the period.However for the period 2017-18 , ch
in EPS is much higher when compared to Change in EBIT , leading to higher finan
leverage. The decrease in the period 2018-19 can be attributed to negative EBIT.
DEGREE OF COMBINED LEVERAGE:
The combined leverage shows the total effect of operating and financial leverage
calculated by multiplying both DFL and DOL for each year.
It shows the total risks associated with the company.
It can be seen that DCL has first increased in the period 2016-17 , then decreased
during the period 2017-18 and 2018-19 , with latter having negative combined
leverage.This is basically due to the effect of DOL on the combined Leverage.
VOLTAS LTD.
ERAGE ANALYSIS
AGE:
rage, we see that it has increased in the year 2016-17
en decreased in 2017-18 and further decreased in

n be inferred from the financial statement that ,

ficant increase in company’s operating expenses ,
osts (Raw Material Consumed & Power , fuel , Water
cant. This clearly indicates that increase in company’s
urced professional jobs) has translated into such
which in turn has led to higher operating leverage.
an be seen that , although sales of company have
T has increased by only 4.81% , thereby leading to a
g leverage.
an be inferred from the financial statement of the
ave increased by 10.98% , but at the same time there
n company’s operating expenses , clearly indicating
s to total operating expenses. This increase in
significant decreases in company's EBIT thereby
verage.
GE:
increased during the period 2015-16 , 2016-17 , and
ing the period 2018-19.
can be clearly inferred that Degree of financial
During the period 2015-16 change in EPS is much less
IT.It is almost same in the period 2016-17 , therefore
r the period.However for the period 2017-18 , change
pared to Change in EBIT , leading to higher financial
eriod 2018-19 can be attributed to negative EBIT.
GE:
he total effect of operating and financial leverage. It is
FL and DOL for each year.
ed with the company.
increased in the period 2016-17 , then decreased
2018-19 , with latter having negative combined
the effect of DOL on the combined Leverage.
 WHIRLPOOL INDIA

2015-16 2016-17
in Rs. Lakhs 2015 2016 % Change 2017 % Change 2018

Sales ₹ 329,378.28 ₹ 380,764.00 15.60% ₹ 436,038.00 14.52% ₹ 498,583.00

EBIT ₹ 36,649.88 ₹ 30,116.61 -17.83% ₹ 47,437.00 57.51% ₹ 54,521.00
EBT ₹ 30,052.24 ₹ 36,481.82 21.39% ₹ 46,848.00 28.41% ₹ 54,082.00
EPS (in Rs.) ₹ 16.59 ₹ 19.50 17.54% ₹ 24.47 25.49% ₹ 27.64

DOL -1.14 3.96

DFL -0.98 0.44
DCL 1.12 1.76

It can be observed that the operating leverage of the company is fluctuating over t
compared with 2015-16, the change in EBIT in 2016-17 is more than four times the inc
when observing the changes in 2017-18, the sales and operating profit increased alm
happened because the sales and expenses increased in somewhat same proportions l
increase in a similar manner. But in 2018-19, the sales increased by half the increme
leaving the DOL at 2. This volatility in opearting leverage means that there is less pre
company's operating profit.

The degree of financial leverage remains less than 1 for the past three financial yea
increased overtime. Apart from 2018-19, there has always been an increase in the int
the company, thus leaving less profit to be taxable and giving shareholders advantage
tax-deductible expense.

The combined leverage measures the overall risk of the company and it has not chang
the past financial years. It has been offset by the increase in DOL and decrease in DF
 2017-18 2018-19
% Change 2019 % Change
Links to
14.34% ₹ 539,765.00 8.26%
14.93% ₹ 63,556.00 16.57%
https://www.whirlpoolindia.com/dam
15.44% ₹ 62,647.00 15.84%
12.95% ₹ 32.08 16.06%
https://www.whirlpoolindia.com/dam
1.04 2.01
0.87 0.97
0.90 1.94
https://www.whirlpoolindia.com/dam

DOL
company is fluctuating over the years. When 5.00 https://www.whirlpoolindia.com/dam
s more than four times the increase in sales. But 4.00
operating profit increased almost equally. This 3.00
somewhat same proportions leaving the EBIT to 2.00
increased by half the increment in EBIT hence 1.00
e means that there is less predictability for the 0.00
ng profit. 2015-
-1.00 2016- 2017- 2018-
16 17 18 19
-2.00

DFL
or the past three financial years. The EPS has 1.50
ys been an increase in the interest expenses of 1.00
iving shareholders advantage of interest being a 0.50
xpense. 0.00
2015- 2016- 2017- 2018-
-0.50
16 17 18 19
-1.00
-1.50

company and it has not changed drastically over DCL

se in DOL and decrease in DFL and vice-versa. 2.50
2.00
1.50
1.00
0.50
0.00
2015- 2016- 2017- 2018-
16 17 18 19
 Links to the data

w.whirlpoolindia.com/dam/images/discover-whirlpool/investors/financials/financials-annual-reports/2015-2016_annual-report-pdf/2015

w.whirlpoolindia.com/dam/images/discover-whirlpool/investors/financials/financials-annual-reports/2016-2017_annual-report-pdf/2016

w.whirlpoolindia.com/dam/images/discover-whirlpool/investors/financials/financials-annual-reports/2017-2018_annual-report-pdf/2017

w.whirlpoolindia.com/dam/images/discover-whirlpool/investors/financials/financials-annual-reports/whirlpool-a_r-2019-lowress-pdf/WH