Chapter- 11 : Leverage + Capital Structure

Chapter- 11 : Leverage + Capital Structure

Chapter- 11 : Leverage + Capital Structure

Q-1 [NU 2015 (Acc) modified] Bilash companys

capital structure is composed of common stock capital
of Tk 20,00,000 (20,000 share @ Tk 100 each) and of

Q-1 [NU 2015 (Acc) modified] Jesmin companys

capital structure is composed of common stock capital
of Tk 20,00,000 (20,000 share @ Tk 100 each) and of

Q-1 [NU 2015 (Acc) modified] Joly companys capital

structure is composed of common stock capital of Tk
20,00,000 (20,000 share @ Tk 100 each) and of 15%

15% debenture of Tk 10,00,000, Corporate tax rate of

the company is 30%. The companys sales 1,00,000
units @ Tk 20 each. Variable cost @ Tk 8 per unit.
Fixed cost Tk 6,00,000.

15% debenture of Tk 10,00,000, Corporate tax rate of

the company is 30%. The companys sales 1,00,000
units @ Tk 20 each. Variable cost @ Tk 8 per unit.
Fixed cost Tk 6,00,000.

debenture of Tk 10,00,000, Corporate tax rate of the

company is 30%. The companys sales 1,00,000 units
@ Tk 20 each. Variable cost @ Tk 8 per unit. Fixed
cost Tk 6,00,000.

Required:
(i)
What are the degrees of operating leverage,
financial leverage and total leverage?

Required:
(i)
What are the degrees of operating leverage,
financial leverage and total leverage?

Required:
(i) What are the degrees of operating leverage,
financial leverage and total leverage?

(ii)

What will be the impact on operating

leverage if sale is increased by 30% and
50%?

Q-2 [NU 2016 (Acc) modified] Capital structure of

Mainul Ltd is as follows:

(ii)

What will be the impact on operating

leverage if sale is increased by 30% and
50%?

(ii) What will be the impact on operating

leverage if sale is increased by 30% and
50%?

Q-2 [NU 2016 (Acc) modified] Capital structure of

Tania Ltd is as follows:

Q-2 [NU 2016 (Acc) modified] Capital structure of

Rozina Ltd is as follows:

Common stock

20,00,000

Common stock

20,00,000

Common stock

20,00,000

10% Debt Capital

10,00,000

10% Debt Capital

10,00,000

10% Debt Capital

10,00,000

Total Capital

30,00,000

The company needs additional financing of Tk

10,00,000. This can be financed by the following three
alternatives:

Total Capital

30,00,000

The company needs additional financing of Tk

10,00,000. This can be financed by the following three
alternatives:

Total Capital

The company needs additional financing of Tk

10,00,000. This can be financed by the following three
alternatives:

(a) Fully equity stock of Tk 100 each.

(a) Fully equity stock of Tk 100 each.

(a) Fully equity stock of Tk 100 each.

(b) Fully 12% Preferred Stock.

(b) Fully 12% Preferred Stock.

(b) Fully 12% Preferred Stock.

(c) Fully 10% Debenture.

(c) Fully 10% Debenture.

(c) Fully 10% Debenture.

If the company expected EBIT Tk 5,00,000 and tax

rate 50%, calculate:

If the company expected EBIT Tk 5,00,000 and tax

rate 50%, calculate:

30,00,000

If the company expected EBIT Tk 5,00,000 and tax

rate 50%, calculate:

(i)

EPS;

(i) EPS;

(i)

EPS;

(ii)

Indifference point of EBIT of alternative (a)

and (c).

(ii) Indifference point of EBIT of alternative (a)

and (c).

(ii)

Indifference point of EBIT of alternative

(a) and (c).

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