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Determine the degree of operating leverage

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Reference no: EM132488732

The following table contains selected operating data for 2 competing firms in the same industry.

                                     Meghan Ltd                        Patel Ltd

Sales                       25,000,000                   30,000,000

Fixed cost                8,000,000                      15,000,000

Variable cost 40% of sales 30% of sales

Figures are in Rupees

Question 1. For both companies determine the Degree of Operating Leverage

Question 2. Which company has a greater amount of business risk and why?

Reference no: EM132488732

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