Financial ManagementTU Board 2024
Consider the following income statement of Delta Manufacturing Company (DMC): Income Statement of DMC as on December 31, 2023ParticularsAmount RsSales (10,000 units @ Rs 40 per unit)400,000Less:…
10Consider the following income statement of Delta Manufacturing Company (DMC): Income Statement of DMC as on December 31, 2023ParticularsAmount RsSales (10,000 units @ Rs 40 per unit)400,000Less: Variable costs(10,000 units @ Rs 20 per unit)200,000Contribution margin200,000Less: Fixed costs100,000Earnings before interest & Tax (EBIT)100,000Less: Interest20,000Earning before tax (EBT)80,000Less: Tax @ 30 percent24,000Earnings after tax or net income56,000 At present, DMC has total number of 10,000 shares outstanding. a. What is the earning per share of DMC? b. Calculate operating the break-even point for DMC. c. Calculate the degree of operating leverage, degree of financial leverage and the degree of combined (total) leverage. d. What would be percentage increase in net profit if DMC increases sales by 20 percent?
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