MCQ for CA Intermediate FMECO - SECTION A - FINANCIAL MANAGEMENT - Chapter 6 - FINANCING DECISIONS - LEVERAGE

Sample Multiple Choice Questions (MCQ's) for CA Intermediate - Paper 8 - FINANCIAL MANAGEMENT & ECONOMICS FOR FINANCE - SECTION A - FINANCIAL MANAGEMENT Chapter 6: FINANCING DECISIONS - LEVERAGE - For Practice relevant for May/November 23 Examinations

 

Q1. If EBIT is ₹ 15,00,000, interest is ₹ 2,50,000, corporate tax is 40%, degree of financial leverage is;

  1. 1:11
  2. 1.20
  3. 1.31
  4. 1.41

Answer: 2

Q2. If DOL is 1.24 and DFL is 1.99, DCL would be:

  1. 2.14
  2. 2.18
  3. 2.31
  4. 2.47

Answer: 4

Q3. Operating Leverage is calculated as:

  1. Contribution ÷ EBIT
  2. EBIT ÷ PBT
  3. EBIT ÷ Interest
  4. EBIT ÷ Tax

Answer: 1

Q4. Financial Leverage is calculated as: 

  1. EBIT ÷ Contribution
  2. EBIT ÷ PBT
  3. EBIT ÷ Sales
  4. EBIT ÷ Variables Cost

Answer: 2

Q5. Which of the following is correct? 

  1. CL = OL + FL
  2. CL = OL – FL
  3. OL = OL × FL
  4. OL = OL ÷ FL

Answer: 3

Q6. Which of the following indicates business risk?

  1. Operating leverage
  2. Financial leverage
  3. Combined leverage
  4. Total leverage

Answer: 1

Q7. Degree of combined leverage is the fraction of:

  1. Percentage change in EBIT on Percentage change in Sales.
  2. Percentage change in EPS on Percentage change in Sales.
  3. Percentage change in Sales on Percentage change in EPS.
  4. Percentage change in EPS on Percentage change in EBIT.

Answer: 2

Q8. Operating leverage is a function of which of the following factors?

  1. Amount of variable cost.
  2. Variable contribution margin.
  3. Volume of purchases.
  4. Amount of semi-variable cost.

Answer: 2

Q9. Financial leverage may be defined as:

  1. Use of funds with a product cost in order to increase earnings per share.
  2. Use of funds with a contribution cost in order to increase earnings before interest and taxes.
  3. Use of funds with a fixed cost in order to increase earnings per share.
  4. Use of funds with a fixed cost in order to increase earnings before interest and taxes.

Answer: 3

 

CA Intermediate FMECO - SECTION A - MCQ for Chapter 7 -   

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