Answer to Question #336861 in Financial Math for anni

Question

For a business firm leverage is about the fixed operating cost and the fixed finance costs

in the cost structure of the firm. For the given details, identify for which firm the degree

of operating leverage and degree of financial leverage are higher and why so:

Firms Amrit Baayu

Sales (Rs.) 3,60,000 7,50,000

Variable cost p.u 20 150

Fixed cost (Rs.) 72,000 1,40,000

Output (units) 6,000 1,500

Interest 40,000 80,00

Answer 1

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