Saved Papers

Save papers so you can find them more easily!

Join Now

Get instant access to over 100,000 papers.

Join Now!

Strategic Finance

1.
From the following selected operating data, determine the DOL and comment on which company has the greater amount of business risk and why?

A B
Sales 2500000 3000000
Fixed Cost 750000 1500000
Variable cost 15% of sales 25% of sales

2.
Sales 2000000
Variable cost 1400000
Fixed Cost 400000 (includes 15% interest on 1 million borrowing


i.) Calculate DOL,DFL
ii.) What if sales increase by 100%

DOL = %D EBIT or Sales – Variable cost
%D Sales Contribution margin

DFL = EBIT
EBIT - Interest

DCL = DOL x DFL

3.
Company A has EBIT of Rs. 2.5 million and its present borrowing are as follows:
14% term loans amounting to 4,000,000
Working Capital Borrowing @16% amounting to 3,300,000
Short term loans @15% amounting to 1,500,000

The sales of the company are growing and to support the extended demand the company proposes to obtain an additional bank loan of Rs. 2.5 million. EBIT is expected to increase by 20%. Calculate......


View the rest of this paper...

Approximate Word Count: 333
Approximate Pages: 2 (250 words per double-spaced page)

Why should you join Frat Files?

  • - It's safe, secure, and private.
  • - Instant access to over 100,000 papers. New papers are added hourly.
  • - Fast and reliable customer support.

Credit Card

Bank Account

PayPal

Similar Essays

  1. Strategic Finance

    Strategic Finance. 1. From the following selected operating data, determine
    the DOL and comment on which company has the greater ...

  2. Financial And Managerial Accounting

    ... Without strong internal processes and management, there is nothing for the capital
    markets to value or auditors to check." (Strategic Finance, June 2005). ...

  3. Managerial And Financial Accounting Report

    ... Compliance. Source: Strategic Finance; May2005, Vol. 86 Issue 11, p11-12, 2p, 1bw.
    Database ... Valuable. Source: Strategic Finance; Jan2006, Vol. 87 ...

  4. Intuition And Decision Making

    ... Strategic Finance, p19. Retrieved November 2, 2006, from ProQuest database. ... Strategic
    Finance, p21. Retrieved November 2, 2006, from ProQuest database.

  5. Managerial And Finanacial Accounting

    ... Strategic Finance. Retrieved April 10, 2008 from EBSCO Host Database. ... Strategic Finance
    82 (1). Retrieved April 10, 2008 from EBSCO Host Database.