Match the items of List - I with the items of List - II and find out the correct matching. List - I…
Contribution / EBIT measures operating leverage, EBIT / EBT measures financial leverage, and Contribution / EBT, the product of the two, measures combined or super leverage.…
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Match the items of List - I with the items of List - II and find out the correct matching.
| List - I (Formulae) | List - II (Type of leverages) |
|---|---|
| (a) Contribution / EBIT | (i) Financial leverage |
| (b) EBIT / Earnings before Tax (EBT) | (ii) Super – leverage |
| (c) Contribution / EBT | (iii) Operating leverage |
Answer and explanation
Correct answer A
Contribution / EBIT measures operating leverage, EBIT / EBT measures financial leverage, and Contribution / EBT, the product of the two, measures combined or super leverage. Hence (a)-(iii), (b)-(i), (c)-(ii).
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UGC NET Commerce