In: Finance
Aruz Berhad sells its product at RM45 per unit. Fixed cost per year is RM220,000 while variable cost is RM15 per unit. The firm has debt capital of RM450,000 and its interest rate is 7%. Firm tax rate is 30% and the total number of shares issued is 300,000 units.
You are required to:
(
Solution:-
To Calculate EBIT and EPS-
To Calculate Degree of Financial Leverage-
Degree of Financial Leverage =
Degree of Financial Leverage =
Degree of Financial Leverage = 1.16 times
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