the operating profit (EBIT) of ABC Ltd. is rs 160000 its capital structure consists of the following:-
10 % debenture rs 5 00000
12% prefrence share rs 100000
eq. share pf rs 100 each rs 400000
the company is in the 35% tax bracket . the withholding tax on prf. dividend is 10%
1) determine the firms EPS
2) determine the % change in EPS associated with 30 % increase in EBIT
3) determine the degree of financial leverage
4) assuming degree of operating leverage as 2, determine the degree of combined leverage
Ans :- 14.58, 22.46% , 1.78, 3.56
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