Details of Kshitij Limited are given below for the year ended 31st March 2025 - Particulars Details Sales 180 lakhs Fixed Cost (Excl Interest) 45…

Particular Amount (₹) Sales 180 lakhs Contribution (180 x 37.5%) WN - 1 67.50 lakhs (-) Fixed Cost (45.00) lakhs EBIT 22.50 lakhs (-) Interest Exp WN - 2 (10.80) lakhs EBT 11.70 lakhs (-) Tax @ 25% (2.925) lakhs EAT 8.775 lakhs No of Equity Shares 1.50 lakhs EPS 5.85 (A) Calculation of OL, FL, CL & P/V Ratio WN 1 - Calculation of P/V Ratio B.E.P Sales = Fixed Cost / PV Ratio PV Ratio = 45 / 120 = 37.5% WN 2 – Calculation of Interest Exp Kd = Interest (1 - t) 9 = Interest (1 – 0.25) Interest = 12% Interest Exp = 90 Lakhs x 12% = 10.8 OL = 1 / Margin of Safety (MOS) MOS = (Actual Sales - BEP Sales) / Actual Sales = (180 - 120) / 180 = 60/180 = 0.3333 OL = 1 / 0.33333 = 3 OR OL = Contribution / EBIT = 67.50 / 22.50 = 3 FL = EBIT / EBT = 22.50 / 11.70 = 1.9231 CL = OL x FL = 3 x 1.9231 = 5.7693 (B) ROCE & EPS EPS = 5.85 (From Income statement above) ROCE = EBIT / Capital Employed Capital Employed = Equity + Debt = 150 + 90 = 240 lakhs ROCE = 22.50 / 240 = 9.375% (C) Since ROCE = 9.375% < Interest = 12%, Kshitij Limited doesn't have a favorable financial leverage. (D) Financial leverage measures the relationship for % change EPS due to changes in EBIT FL = % change in EPS / % change in EBIT 1.9231 = % change in EPS / 15 % change in EPS = 28.8465% Therefore, EPS will increase or decrease by 28.8465%, if EBIT increases or decreases by 15% (E) Current PAT = 8.775 lakhs 3/4th of current PAT = 6.58125 lakhs So, it means PAT decreases by 25% Combined leverage measures the relationship for % change in PAT due to changes in sales CL = % change in PAT / % change in Sales 5.7693 = 25 / % change in Sales % Change in Sales = 4.333% New Sales level = 180 lakhs - 4.33% = 172.20 Lakhs