Volga is a large manufacturing company in the private
sector. In 2007 the company had a gross sale of Rs.980.2
crore. The other financial data for the company are given
below:
Items Rs. In crore
Net worth 152.31
Borrowing 165.47
EBIT 43.17
Interest 34.39
Fixed cost (excluding interest) 118.23
Calculate:
a. Debt equity ratio
b. Operating leverage
c. Financial leverage
d. Combined leverage. Interpret your results and comment on
the Volga’s debt policy
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