Calculate operating leverage of tax rate, Finance Basics

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A firm has sales of Rs. 10,00,000. Variable cost is 70%, total cost is Rs.9,00,000 and Debt of Rs. 5,00,000 at 10% rate of interest. If tax rate is 40% calculate:                                                                                    

(a)   Operating Leverage

(b)   Financial Leverage

(c)    Combined Leverage

(d)   If the firm wants to double up its EBIT, how much of a raise in sales would be needed on a % basis?

 


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