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CA Inter Leverage (Finance) — practice questions — page 2

Explore 71 free Leverage (Finance) questions in CA Inter Financial Management. Open each question or exercise to read its content, reference answers and available explanation.

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Leverage (Finance) questions and exercises with answers

Showing questions 31–60 of 71.

The 2008 financial crisis was blamed in part on what?Read the answer and worked solution →A bank capital requirement must be funded in what way?Read the answer and worked solution →A reserve requirement is a fraction of deposits held in what form?Read the answer and worked solution →Times interest earned is EBIT divided by what?Read the answer and worked solution →If interest coverage is below one, the firm's EBIT is what?Read the answer and worked solution →A low interest coverage ratio makes a firm more vulnerable to what?Read the answer and worked solution →Degree of financial leverage equals EBIT divided by which amount?Read the answer and worked solution →DOL can be written as (EBIT + fixed costs) divided by what?Read the answer and worked solution →Combined leverage equals DOL multiplied by which measure?Read the answer and worked solution →Fixed cost relative to variable cost parallels which ratio?Read the answer and worked solution →One common definition of financial leverage is total debt divided by what?Read the answer and worked solution →Financial leverage arises from which fixed charge?Read the answer and worked solution →Sales Rs 10 lakh, variable cost Rs 6 lakh, fixed cost Rs 2 lakh. DOL is?Read the answer and worked solution →Contribution is Rs 90,000 and EBIT is Rs 30,000. What is the DOL?Read the answer and worked solution →With a DOL of 4, a 5% rise in sales lifts EBIT by about what?Read the answer and worked solution →A firm with DOL 2.5 faces an 8% fall in sales. EBIT falls by?Read the answer and worked solution →EBIT is Rs 6 lakh and interest is Rs 2 lakh. What is the DFL?Read the answer and worked solution →EBIT of Rs 50,000 with interest of Rs 10,000 gives a DFL of?Read the answer and worked solution →At DFL 2 with no preference dividend, a 15% EBIT rise lifts EPS by?Read the answer and worked solution →DOL is 2 and DFL is 1.5. What is the combined leverage?Read the answer and worked solution →Contribution Rs 8 lakh, EBIT Rs 5 lakh, interest Rs 1 lakh. DCL is?Read the answer and worked solution →With combined leverage of 3, a 10% sales rise lifts EPS by?Read the answer and worked solution →DOL is 1.6 and combined leverage is 4.8. What is DFL?Read the answer and worked solution →With EBIT at Rs 9 lakh and interest at Rs 3 lakh, coverage is how many times?Read the answer and worked solution →Price Rs 50, variable cost Rs 30, 5,000 units, fixed cost Rs 40,000. DOL?Read the answer and worked solution →A maker sells 2,000 units at Rs 100 with Rs 60 variable cost and Rs 50,000 fixed. DOL?Read the answer and worked solution →Contribution of Rs 12 lakh and fixed costs of Rs 8 lakh give a DOL of?Read the answer and worked solution →A shop sells Rs 5 lakh, spends Rs 3 lakh variable and Rs 1.5 lakh fixed. DOL?Read the answer and worked solution →A firm earns Rs 4 lakh EBIT and bears Rs 2 lakh fixed costs. Its DOL is?Read the answer and worked solution →A firm has EBIT Rs 4 lakh, fixed cost Rs 2 lakh, interest Rs 1 lakh. Its DCL?Read the answer and worked solution →

Worked practice questions

The 2008 financial crisis was blamed in part on what?

  1. Fixed exchange rates
  2. Low rates of taxation
  3. Excessive leverage
  4. Inflation targeting
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Correct answer: C. Excessive leverage

Households and financial institutions carried heavy debt, so falling asset prices caused defaults.

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A bank capital requirement must be funded in what way?

  1. In liquid government bonds
  2. In precious metals reserves
  3. As customer demand deposits
  4. With equity-like securities
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Correct answer: D. With equity-like securities

Capital requirements demand a share of assets be funded by equity or equity-like securities, unlike reserves.

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A reserve requirement is a fraction of deposits held in what form?

  1. Fixed assets
  2. Liquid form
  3. Equity form
  4. Long-term bonds
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Correct answer: B. Liquid form

Reserves must be kept liquid, such as precious metals or government notes, unlike capital which is equity funded.

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More Financial Management topics

Sources of FinanceCost of Capital BasicsWorking CapitalCapital Structure BasicsDividend BasicsCapital Budgeting BasicsDividend PoliciesFinancial Management