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Operating leverage x Financial leverage =

This question belongs to Commerce Financial Management
Financial Management
?

Operating leverage x Financial leverage = ________

Answer & Solution
Correct Answer: Option A
The Combined Leverage (CL) is not a distinct type of leverage analysis, rather it is a product of the Operating Leverage and the Financial Leverage. The CL may be defined as the % change in EPS for a given % change in the sales level and may be calculated as follows:

Combined Leverage = Operating Leverage x Financial Leverage = % Change in EPS / % Change in sales
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3 Comments
Keshava Mysore
Keshava Mysore 6 years ago
The correct answer should be combined leverage as the solution deck suggests combined leverage = operating leverage x financial leverage, but the right answer is given as Operating combined leverage. There seems to be come contradiction.
Surendra Kumar
Surendra Kumar 6 years ago
Answer should be (A)
Sirjna Kunwar
Sirjna Kunwar 8 years ago
Combined leverage is a combination of financial leverage and operating leverage. The answer should be A. But here the answer is c.
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