alleryStart learning →DOL is 5 and EBIT is Rs 2 lakh. Sales rise 6%. New EBIT is?
- Rs 3.0 lakh
- Rs 2.12 lakh
- Rs 2.3 lakh
- Rs 2.6 lakh
Show answer and solution
Correct answer: D. Rs 2.6 lakh
EBIT grows 5 times 6%, which is 30%, so 2 lakh becomes 2.6 lakh.
CA Inter Leverage (Finance) — practice questions — page 3
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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Showing questions 61–71 of 71.
DOL is 5 and EBIT is Rs 2 lakh. Sales rise 6%. New EBIT is?Read the answer and worked solution →Contribution margin ratio is 40% and operating margin is 10%. DOL?Read the answer and worked solution →A firm earns 20% operating margin on a 60% contribution margin ratio. DOL?Read the answer and worked solution →DOL is 1.33 and sales rise 15%. EBIT rises by about what?Read the answer and worked solution →1,000,000 units sell at Rs 50; variable cost Rs 10; fixed cost Rs 1 crore. DOL?Read the answer and worked solution →A firm with no fixed costs sees sales rise 10%. EBIT rises by what?Read the answer and worked solution →Firm B has DOL 4 and firm A has DOL 2. Sales rise 10%. B's EBIT rises by?Read the answer and worked solution →Interest of Rs 60,000 against EBIT of Rs 1,20,000 gives a DFL of?Read the answer and worked solution →A firm with no debt and no preference capital has a DFL of what?Read the answer and worked solution →Raising interest expense while EBIT stays fixed does what to DFL?Read the answer and worked solution →DFL is 1.8 and EBIT rises 10% with no preference dividend. EPS rises by?Read the answer and worked solution →
Worked practice questions
Contribution margin ratio is 40% and operating margin is 10%. DOL?
- 4.0
- 1.4
- 3.0
- 0.25
Show answer and solution
Correct answer: A. 4.0
DOL is contribution margin ratio over operating margin, 40 divided by 10, giving 4.0.
A firm earns 20% operating margin on a 60% contribution margin ratio. DOL?
- 4.0
- 3.0
- 1.5
- 0.33
Show answer and solution
Correct answer: B. 3.0
Dividing 60% by 20% gives a DOL of 3.0.
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