IPCC Financial Management....... Practice Manual .......Q.No 13......
The formula for Financial Leverage is given as EBIT/EBIT-I
Can anybody explain this.
Menu
Financial leverage
Replies (2)
FL=EBIT/EBT
EBIT=earnings before interest & tax
EBT=earnigs before Tax
So,EBIT-I means earnings before interest & tax minus Interest...that is ..earnigs before Tax
"I" here means interest
Consider example-:
EBIT=Rs.100000
10% debentures=Rs.10000
calculate EBT??
EBT=EBIT-Interest=100000 minus 1000 [10% of 10000]=Rs.99000
EBT can be expressed as EBIT - I.
Thus, instead of EBT in the denominator, it is substitued with EBIT - I
Recent Topic
- Startup exit in Sept 2025: Can I still save LTCG t
- Need advice
- GST registration
- Tax Refund timeline
- Is Form 10E applicable for Notice Pay received in
- INCOME RECEIVED FROM COMPANY FOR ELECTRIC POLLS
- ITR Processing By CPC Now Super Fast - Much apprec
- Abroad Jobs
- Professional Income in 44AD
- Presumptive taxation
Related Topics
CAclubindia
