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a. Gigih Bhd, a trading company has provided you with the following data: Sales RM8,000,000 Sales in unit 14,000,000 Variable cost per un RM0.0/kg Fixed
a. Gigih Bhd, a trading company has provided you with the following data: Sales RM8,000,000 Sales in unit 14,000,000 Variable cost per un RM0.0/kg Fixed costs RM2,200,000 Interest RM2,000,000 Corporation tax 28% Calculate: i. The degree of operating leverage. (3 marks) ii. The degree of financial leverage. (3 marks) iii. The degree of combined leverage. (2 marks) iv. The percentage change in EBIT if sales decreased by 25% (2 marks) v. The percentage change in EPS if sales increased by 15% (2 marks) vi. The new value EBIT if sales decrease 10%. (4 marks) vii. What is operating leverage? How does it affect a firm's business risk? (4 marks)
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