Cash flow

Maneesh 30 April 2020 at 14:48 PM

This year, Nicon Industries increased earnings before interest and taxes (EBIT) by 15%. During the same period, net
income after tax increased by 62%. The degree of financial leverage that existed during the year is

A) 4.13
B) 3.96
C)4.00
D)0.24

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FACULTY 10 May 2020 at 03:25 PM

degree of financial leverage = percentage change in EBIT / percentage change in EBT

= 62%/15%

= 4.13 (option A)

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