Leverages, Financial Management

Assignment Help:

Leverages

'Leverages' are of prime importance in the analysis of a companies' risk. They give a good picture of the business, financial and the overall risk of a company's operations. Following three leverages are the most important in this regard:

 

Operating Leverage (OL) = Contribution / EBIT

  • It is a measure of the business risk.

 

Financial Leverage (FL) = EBIT / PBT

  • It is a measure of the financial risk.

 

Combined Leverage = OL * FL = Contribution / PBT

  • It is a measure of the overall risk.

 

 

 


Related Discussions:- Leverages

Explain net present value method, Q. Explain Net Present Value Method? ...

Q. Explain Net Present Value Method? Net Present Value (NPV) Method: - This process measures the Present value of returns per rupee invested. In this method present value of

Long and short dated volatility, Q. Long and short dated volatility? 1....

Q. Long and short dated volatility? 1. If an investor purchase long-dated volatility as well as sells short-dated volatility then the investor is expecting a decrease in the sh

Chi square distribution, Chi Square Distribution If the difference betw...

Chi Square Distribution If the difference between actual and the expected frequencies is zero, the sampling distribution of the chi square statistic c 2  will be identical to a

PROFIT MAXIMIZATION, what are the arguments in favour of profit maximizat...

what are the arguments in favour of profit maximization?

Features of capital budgeting decisions, Q. Features of Capital Budgeting D...

Q. Features of Capital Budgeting Decisions? Features of Capital Budgeting Decisions:- Moneys are invested in long-term assets. Moneys are invested in present times i

Offshore financial center, Offshore Financial Center It is a location w...

Offshore Financial Center It is a location with banking facilities to accept deposits and make loans in currencies various from the currency's country of origin. Banks located

Define the modigliani and miller theory of dividends, What is the Modiglian...

What is the Modigliani and Miller theory of dividends?  Explain. The Modigliani-Miller theory of dividends states that dividend theory is not relevant.  They state that it is the

What are assumptions of walters dividend model, Q. What are assumptions of ...

Q. What are assumptions of Walters dividend model? 1. Constant Return and Cost of Capital: - The Walter' model presume that the firm's rate of return and its cost of capital ar

Just-in-time inventory management, Q. Just-in-time inventory management? ...

Q. Just-in-time inventory management? It considerably improves the short-term liquidity of the business with a maximum financing requirement of $138533 rather than $155640. The

Assignment, I should write assignment on financial management ,but have no ...

I should write assignment on financial management ,but have no idea how to start and how to develop. Please help me

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd