Essays.club - Get Free Essays and Term Papers
Search

Arvind Ltd. Case Study

Autor:   •  March 23, 2018  •  439 Words (2 Pages)  •  501 Views

Page 1 of 2

...

Less: fixed cost 1187.45

EBIT 351.48

Less: interest 305.51

EBT 45.97

Computation operating Leverage:

(A) DOL = Cotrn[pic 3]

EBIT

1538.93[pic 4][pic 5]

351.48

[pic 6]

4.38

(B) DFL = EBIT[pic 7]

EBT

351.48[pic 8][pic 9][pic 10]

45.97

7.65[pic 11]

(C) DCL = DOL *DFL

= 7.65*4.38

= 33.50

- Assumption for DOL: - DOL ratio is high .Therefore, there is high risk that company may not able to cover its fixed cost.

- Assumption of DFL:- there is high financial leverage. Therefore company return on asset may not Exceed the interest on the loan. Which greatly diminishes company’s return on equity and profitability.

- Assumption of DCL: - There is high combined leverage.it indicates company is highly risky and hence we can say it is not profitable to invest this company.

Capital Structure

Particulars

Amount(in crs)

Authorized:

Equity shares(565000000*Rs.10/- per share)

Preference shares(10000000*Rs100/-per share)

Total

Issued:-

Equity shares(258243969* Rs 10/- per shares)

Total

Fully paid-up and subscribed share capital;-

Equity share(258243069*Rs 10/- per share)

Total:

Debt:-

Long Term borrowings:

(Secured)

Term Loans:

From Banks

Other financial institutions

(Unsecured)

From other Financial Institution

Total :-

565.00

100.00

665

258.24

258.24

258.24

258.24

1086.96

81.78

2.58

1171.32

Debt and Equity mix in capital structure is equity 18% and Debt. 82%.

Interest

- From Banks:-

- Rupee Loans Rs.1,223.47 lakh . 10.50% to 13% Repayable in quarterly instalments ranging between 4 to 28 with moratorium period in some of the loans.

- Hire Purchase Loan Rs 8.06 lakh . 10.25% Monthly payment of Equated Monthly Instalments beginning from the month subsequent to taking the loans.

- Foreign Currency Loans Rs.68.26 lakh. LIBOR+3.40% Repayable in 8 equal half yearly instalments starting from September 2015.

- From Financial Institutions and Others

- Rupee Loans Rs.101.04. 10.75% to 11% Repayable in equal quarterly instalments ranging between 8 to 18.

- Foreign Currency Loans Rs.15.09 lakh. LIBOR+ 3.75% Repayable in 8 equal quarterly instalments.

- Hire Purchase Loan Rs.0.09. 8.37% Monthly payment of Equated Monthly Instalments beginning from the month subsequent to taking the loans.

...

Download:   txt (4.4 Kb)   pdf (54.2 Kb)   docx (17.6 Kb)  
Continue for 1 more page »
Only available on Essays.club