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Leverages

Financial Management

In this sum num 10 Degree of financial leverage is 1.25 When i use this as DFL = EBIT/EBIT -INTEREST 1.25 = EBIT /EBIT - 242000 EBIT = 121000 But in the given answer , EBIT comes as 340000 Where am i going wrong Can anyone help me out?

Naveen Vs

CA Inter

★ 470

27-Mar-23 17:58

226

Answers (2)

Poorly drafted question. Please check the note provided by ICAI themselves towards the end of the solution - they have said that solution will vary if you use the method suggested by you and that is ok