● 2. From the following information of Trends Ltd., calculate the Degree of Operating Leverage, financial Leverage and Combined Leverage for each situation A and B under financial plans I, II and III. Also indicate which of the above plan is most risky and which one is least risky.

Production and sales 1,000 units Selling price per unit `20 Variable cost per unit `15 Fixed cost (operating)

Situation A `3,000 Situation B `4,000 Capital Structure:

Plan I (`) II (`) III (`)

Equity 7,000 5,000 3,000 10% debt 3,000 5,000 7,000 10,000 10,000 10,000