Question

A company reports an EBIT (Earnings Before Interest and Tax) of ₹10,00,000. It incurs interest charges of ₹2,00,000. The company also pays a Preference Dividend of ₹1,00,000 and an Equity Dividend of ₹7,00,000. On the basis of this information, calculate the Financial Leverage.

A 1.25
B 1.5
C 1.2
D 1.1
E 2.0
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