The following details are provided by the CFO of the Viju Ltd., to his newly appointed Executive Assistant. This information is pertaining to one of the main competitor of Viju Ltd. From the given information, work out t

Financial leverage = 2:1 Financial leverage = EBIT/EBT 2/1 = EBIT/(EBIT - Interest) 2/1 = EBIT/(EBIT - ₹20 lakhs) EBIT = 2(EBIT - ₹20 Lakhs) EBIT = 2EBIT - ₹40 Lakhs EBIT = ₹40 Lakhs...........(1) Operating Leverage = 3:1 Operating Leverage = Contribution/EBIT 3/1 = Contribution/₹40 Lakhs Contribution = ₹40 lakhs x 3 = ₹120 Lakhs ............(2) Variable cost = 60% of sales Contribution = 40% of sales Therefore, Sales = 100/40 x ₹120 Lakhs = ₹300 Lakhs .....(3) Contribution - Fixed Cost = EBIT ₹120 Lakhs - Fixed Cost = ₹40 lakhs Fixed Cost = ₹80 lakhs. ............(4) Income Statement of Competitor of Viju Ltd. Particulars ₹ Lakhs Sales (3) 300 Less: Variable Cost (60% of sales) 180 Contribution (2) 120 Less: Fixed Cost excluding Interest (4) 80 EBIT (1) 40 Less: Interest 20 Profit before tax (PBT) 20 Less: Corporate Tax @ 40% 08 Profit after tax 12