4. Set (B) [7 Marks]

The following information is provided about Company A and B:

	Company A	Company B
Output (in units)	60000	15000
Fixed cost (in rupees)	7000	14000
Variable cost (in rupees)	0.2	1.5
Interest on borrowed funds (in rupees)	4000	8000
Selling price per unit	0.6	5.00

A. Calculate the Degree of Operating Leverage, Degree of Financial Leverage and the Degree of Combined Leverage. [ 6 Marks]

B. Comment on the risk factor with relation to each company. [ 1 Mark]