UGC NET Exam > UGC NET Questions > Degree of financial leverage is defined as :a...
Start Learning for Free
Degree of financial leverage is defined as :
- a)The percentage change in the earnings before interest and taxes relative to a given percentage change in sales
- b)The percentage change in EPS due to a given percentage change in EBIT
- c)The percentage change in interest rate in relation to the changes in quantum of debt
- d)The percentage sales in relation to percentage change in EBIT
Correct answer is option 'B'. Can you explain this answer?
| FREE This question is part of | Download PDF Attempt this Test |
Most Upvoted Answer
Degree of financial leverage is defined as :a)The percentage change in...
Leverage:
- Leverage is a company’s capacity to utilize new resources or assets to make better returns or diminish costs.
- Leverage is a reason that is influential for any organization is extremely huge.
- As a rule, leverage implies the impact of one variable over another.
- There are three proportions of leverage that are financial leverage, operating leverage, and combined leverage.
- The financial leverage assesses the impact of interest costs, while the operating leverage estimates the impact of fixed costs.
Key Points
- The usage of such sources of assets that convey fixed monetary charges or financial in an organization’s monetary structure to procure more profit from speculation is known as financial leverage.
- The degree of financial leverage (DFL) is utilized to gauge the impact on earnings per share (EPS) because of the adjustment of firms’ working benefit or operating profit, for example, EBIT.
- At the point when an organization utilizes obligation assets in its capital construction having fixed monetary charges as interest, it is said that the firm utilized monetary influence.
- The DFL depends on interest and money charges; in the event that these expenses are higher, DFL will likewise be higher, which will, at last, bring about the monetary gamble of the organization.
Important Points
The formula to calculate the degree of financial Leverage is:
DFL = % Change in EPS / % Change in EBIT
Or
DFL = EBIT/ EBT
Hence, Degree of financial leverage is defined as the percentage change in EPS due to a given percentage change in EBIT.
Free Test
FREE
| Start Free Test |
Community Answer
Degree of financial leverage is defined as :a)The percentage change in...
Leverage:
- Leverage is a company’s capacity to utilize new resources or assets to make better returns or diminish costs.
- Leverage is a reason that is influential for any organization is extremely huge.
- As a rule, leverage implies the impact of one variable over another.
- There are three proportions of leverage that are financial leverage, operating leverage, and combined leverage.
- The financial leverage assesses the impact of interest costs, while the operating leverage estimates the impact of fixed costs.
Key Points
- The usage of such sources of assets that convey fixed monetary charges or financial in an organization’s monetary structure to procure more profit from speculation is known as financial leverage.
- The degree of financial leverage (DFL) is utilized to gauge the impact on earnings per share (EPS) because of the adjustment of firms’ working benefit or operating profit, for example, EBIT.
- At the point when an organization utilizes obligation assets in its capital construction having fixed monetary charges as interest, it is said that the firm utilized monetary influence.
- The DFL depends on interest and money charges; in the event that these expenses are higher, DFL will likewise be higher, which will, at last, bring about the monetary gamble of the organization.
Important Points
The formula to calculate the degree of financial Leverage is:
DFL = % Change in EPS / % Change in EBIT
Or
DFL = EBIT/ EBT
Hence, Degree of financial leverage is defined as the percentage change in EPS due to a given percentage change in EBIT.
Attention UGC NET Students!
To make sure you are not studying endlessly, EduRev has designed UGC NET study material, with Structured Courses, Videos, & Test Series. Plus get personalized analysis, doubt solving and improvement plans to achieve a great score in UGC NET.
|
Explore Courses for UGC NET exam
|
|
Top Courses for UGC NETView all
Degree of financial leverage is defined as :a)The percentage change in the earnings before interest and taxes relative to a given percentage change in salesb)The percentage change in EPS due to a given percentage change in EBITc)The percentage change in interest rate in relation to the changes in quantum of debtd)The percentage sales in relation to percentage change in EBITCorrect answer is option 'B'. Can you explain this answer?
Question Description
Degree of financial leverage is defined as :a)The percentage change in the earnings before interest and taxes relative to a given percentage change in salesb)The percentage change in EPS due to a given percentage change in EBITc)The percentage change in interest rate in relation to the changes in quantum of debtd)The percentage sales in relation to percentage change in EBITCorrect answer is option 'B'. Can you explain this answer? for UGC NET 2024 is part of UGC NET preparation. The Question and answers have been prepared according to the UGC NET exam syllabus. Information about Degree of financial leverage is defined as :a)The percentage change in the earnings before interest and taxes relative to a given percentage change in salesb)The percentage change in EPS due to a given percentage change in EBITc)The percentage change in interest rate in relation to the changes in quantum of debtd)The percentage sales in relation to percentage change in EBITCorrect answer is option 'B'. Can you explain this answer? covers all topics & solutions for UGC NET 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Degree of financial leverage is defined as :a)The percentage change in the earnings before interest and taxes relative to a given percentage change in salesb)The percentage change in EPS due to a given percentage change in EBITc)The percentage change in interest rate in relation to the changes in quantum of debtd)The percentage sales in relation to percentage change in EBITCorrect answer is option 'B'. Can you explain this answer?.
Degree of financial leverage is defined as :a)The percentage change in the earnings before interest and taxes relative to a given percentage change in salesb)The percentage change in EPS due to a given percentage change in EBITc)The percentage change in interest rate in relation to the changes in quantum of debtd)The percentage sales in relation to percentage change in EBITCorrect answer is option 'B'. Can you explain this answer? for UGC NET 2024 is part of UGC NET preparation. The Question and answers have been prepared according to the UGC NET exam syllabus. Information about Degree of financial leverage is defined as :a)The percentage change in the earnings before interest and taxes relative to a given percentage change in salesb)The percentage change in EPS due to a given percentage change in EBITc)The percentage change in interest rate in relation to the changes in quantum of debtd)The percentage sales in relation to percentage change in EBITCorrect answer is option 'B'. Can you explain this answer? covers all topics & solutions for UGC NET 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Degree of financial leverage is defined as :a)The percentage change in the earnings before interest and taxes relative to a given percentage change in salesb)The percentage change in EPS due to a given percentage change in EBITc)The percentage change in interest rate in relation to the changes in quantum of debtd)The percentage sales in relation to percentage change in EBITCorrect answer is option 'B'. Can you explain this answer?.
Solutions for Degree of financial leverage is defined as :a)The percentage change in the earnings before interest and taxes relative to a given percentage change in salesb)The percentage change in EPS due to a given percentage change in EBITc)The percentage change in interest rate in relation to the changes in quantum of debtd)The percentage sales in relation to percentage change in EBITCorrect answer is option 'B'. Can you explain this answer? in English & in Hindi are available as part of our courses for UGC NET.
Download more important topics, notes, lectures and mock test series for UGC NET Exam by signing up for free.
Here you can find the meaning of Degree of financial leverage is defined as :a)The percentage change in the earnings before interest and taxes relative to a given percentage change in salesb)The percentage change in EPS due to a given percentage change in EBITc)The percentage change in interest rate in relation to the changes in quantum of debtd)The percentage sales in relation to percentage change in EBITCorrect answer is option 'B'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of
Degree of financial leverage is defined as :a)The percentage change in the earnings before interest and taxes relative to a given percentage change in salesb)The percentage change in EPS due to a given percentage change in EBITc)The percentage change in interest rate in relation to the changes in quantum of debtd)The percentage sales in relation to percentage change in EBITCorrect answer is option 'B'. Can you explain this answer?, a detailed solution for Degree of financial leverage is defined as :a)The percentage change in the earnings before interest and taxes relative to a given percentage change in salesb)The percentage change in EPS due to a given percentage change in EBITc)The percentage change in interest rate in relation to the changes in quantum of debtd)The percentage sales in relation to percentage change in EBITCorrect answer is option 'B'. Can you explain this answer? has been provided alongside types of Degree of financial leverage is defined as :a)The percentage change in the earnings before interest and taxes relative to a given percentage change in salesb)The percentage change in EPS due to a given percentage change in EBITc)The percentage change in interest rate in relation to the changes in quantum of debtd)The percentage sales in relation to percentage change in EBITCorrect answer is option 'B'. Can you explain this answer? theory, EduRev gives you an
ample number of questions to practice Degree of financial leverage is defined as :a)The percentage change in the earnings before interest and taxes relative to a given percentage change in salesb)The percentage change in EPS due to a given percentage change in EBITc)The percentage change in interest rate in relation to the changes in quantum of debtd)The percentage sales in relation to percentage change in EBITCorrect answer is option 'B'. Can you explain this answer? tests, examples and also practice UGC NET tests.
|
|
Explore Courses for UGC NET exam
|
|
Suggested Free Tests
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
|
© EduRev
|
Education Revolution
|
Follow Us
|
Signup to see your scores
go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup