Formula for calculating Financial Leverage is _____________.

EBIT

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Contribution

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EBIT

\div

EBT

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EBIT

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Sales

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EBIT

\div

Variable Cost

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Solution

The correct option is B EBIT $\div$ EBT
Financial leverage depicts the amount of the debt used to acquire additional assets. It is the proportion of debt present in the total Capital Structure. The formula for Financial leverage is EBIT/ EBT.

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Similar questions

Financial leverage is called favourable if

(a) Return on investment is lower than the cost of debt

(b) Rol is higher than the cost of debt

(d) If the degree of existing financial leverage is low

Financial leverage is called favourable if

(a) Return on investment is lower than the cost of debt

(b) ROI is higher than the cost of debt

(d) If the degree of existing financial leverage is low

Financial leverage is the amount of total debt in the capital. It is calculated as:

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