Archive | Financial Leverages

Financial Leverage: Impact, Degree and Limitations

After reading this article you will learn about Financial Leverage:- 1. Impact of Financial Leverage 2. Degree of Financial Leverage 3. Significance 4. Limitations. Impact of Financial Leverage: The financial leverage is used to magnify the shareholders earnings. It is based on the assumption that the fixed charges/costs funds can be obtained at a cost […]

Formula for Calculating Combined Leverage

Combined/composite/total leverage measures the relationship between quantity produced and sold and EPS. Thus, the degree of combined leverage (DCL) is computed as under: Illustration: Calculate the degree of operating leverage, degree of financial leverage and the degree of combined leverage for the following firms and interpret the result: Solution: Interpretation and Comments: From the above […]

Profit/Volume (P/V) Graph: Meaning and Method

After reading this article you will learn about Profit/Volume (P/V) Graph:- 1. Meaning of Profit/Volume Graph or Profit Chart 2. Method of Constructing P/V Graph. Meaning of Profit/Volume Graph or Profit Chart: A P/V Graph expresses the relationships between profit and volume. Its usefulness is to show a direct relationship between profit and the volume […]

Financial Leverage: Meaning, Types and Degree

After reading this article you will learn about Financial Leverage:- 1. Meaning of Financial Leverage 2. Types of Financial Leverage 3. Degree 4. EBIT-EPS Analysis. Meaning of Financial Leverage: Financial leverage may be expressed when the residual net income (earnings after interest and taxes and preference dividend) varies not in proportion with operating profit (EBIT). […]

shopify traffic stats