preity (student) (121 Points)
13 December 20121 branch a/c
how 2 adjust trade discounts and allowances in branch accounts? what does 'already adjusted in invoice' mean?
2 electricity cos
actual profit 8,50,000 reasonable return 8,00,000 pls help me with the workings of distribution of profits
3 fm
what is the relation between financial break even point and financial risk? ie if plan a has 200000 EBIT at fin BEP and plan b has 320000 EBIT at fin BEP which plan is more risky?
thanx a lot....
CA Hareesh
( )
(1642 Points)
Replied 13 December 2012
Ans for qn #2
As per my view, the question of 'disposal of surplus' does not arise on the grounds that the clear profit did not exceed 20% of reasonable return..
Ans for qn#3
The financial break-even point for a company is the level at which the sales of merchandise equals the fixed costs for producing the products i.e the actual break even point where contribution equals FC.
whereas financial risk is something which represents the distortion of level of profit or loss in accordance with the quantum of debt content in the capital structure
and, plan B is riskier because it has the higher BEP i.e it needs 320000EBIT to cover up the fixed costs whereas plan A breaks even at 200000EBIT itself.
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