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    Question

    EBIT = ₹1,00,000; Fixed Financial Cost = ₹25,000;

    Contribution = ₹2,00,000; Fixed Operating Cost = ₹1,00,000 Calculate Combined Leverage.
    A 2.0 Correct Answer Incorrect Answer
    B 2.67 Correct Answer Incorrect Answer
    C 3.0 Correct Answer Incorrect Answer
    D 1.8 Correct Answer Incorrect Answer

    Solution

    Operating Leverage = Contribution / EBIT = ₹2,00,000 / ₹1,00,000 = 2 Financial Leverage = EBIT / EBT = ₹1,00,000 / ₹75,000 = 1.33 Combined Leverage = 2 × 1.33 = 2.67

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