alleryStart learning →A firm with no fixed costs sees sales rise 10%. EBIT rises by what?
A5%
B0%
C10%
D20%
Answer & Solution
Correct answer: C. 10%
With no fixed costs DOL is 1, so operating income moves by the same 10%.
Keep practising Leverage (Finance)
Browse all Leverage (Finance) questions for CA Inter, or explore more Financial Management topics.
Related questions
DFL is 1.8 and EBIT rises 10% with no preference dividend. EPS rises by?Raising interest expense while EBIT stays fixed does what to DFL?A firm with no debt and no preference capital has a DFL of what?Interest of Rs 60,000 against EBIT of Rs 1,20,000 gives a DFL of?Firm B has DOL 4 and firm A has DOL 2. Sales rise 10%. B's EBIT rises by?1,000,000 units sell at Rs 50; variable cost Rs 10; fixed cost Rs 1 crore. DOL?DOL is 1.33 and sales rise 15%. EBIT rises by about what?A firm earns 20% operating margin on a 60% contribution margin ratio. DOL?