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Capital Structure
Capital Structure
EPS, ROE and ROI are the important figures for analysing the
impact of financial leverage.
𝑁1
𝐸𝐵𝐼𝑇 = × 𝐼𝑁𝑇
𝑁1 − 𝑁2
Financial Management, 12e I M Pandey
Example
16
0.65EBIT=
0.65EBIT=390,000
EBIT==₹600,000
Alternate formula:
=₹600,000
Operating leverage
affects a firm’s operating