A company has sales of 6,00,000, variable cost of 2,40,000, fixed operating cost of 2,70,000. The financial leverage is 2.5. The company wants to…

CA Intermediate · Financial Management and Strategic Management · PYQS · September 2024
A company has sales of 6,00,000, variable cost of 2,40,000, fixed operating cost of 2,70,000. The financial leverage is 2.5. The company wants to double its EBIT. The percentage change in sales required in order to double its EBIT will be :
(A) 50%
(B) 25%
(C) 40%
(D) 80%

Suggested Answer and Working Notes:

Correct Answer: Option (B)

25%

Topics: Part-A: Financial Management

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