The balance sheet of international trade ltd as on 3132008, Ask an Expert

Finance

The Balance Sheet of International Trade Ltd. as on 31/3/2008 is as under:-

Liabilities	Amount	Assets	Amount
Equity capital (Rs. 10 Each)	90	Building	150
10% Long term debt	120	Machinery	75
Retained Earnings	30	Stock	50
Current Liabilities	60	Debtors	20
		Cash	5
Total	300	Total	300

The total assets turnover ratio of the company is 3, its fixed operating cost is 1/6 of sales and variable operating cost is 50% of sales. The corporate tax rate is 35%.

You are require to:

(i) Calculate the operating, financial and combined leverage.

(ii) Calculate the market price of the share if the P/E multiple is 2.5

(iii) Calculate the level of EBIT if the EPS is (a) Rs.15 (b) Rs.25.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M9528851

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