Question
The information relating to X & Co. is given below:-
EBIT = Rs 11, 20,000
PBT = Rs 3, 20,000
Fixed Cost = Rs 7, 00,000
Calculate the change in EPS if sales are expected to increase by 5%.
Answer :
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Degree of Combined Leverage i.e. Multiplication of Operating Leverage and Financial leverage denotes the relationship between Sales and Earning per share (EPS) of the firm. In other words, % change in EPS as a result of % change in Sales. Thus we are required to compute
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