20060301
15-14-1
Financial Leverage
15-14 Financial Leverage
Financial Leverage lets you calculate the degree of change in net earnings arising from a
change in interest paid.
Financial Leverage Field
s
The following fields appear on the Financial Leverage calculation page.
Field
De
s
cription
EBIT
Earnings before interest and taxes
INT
Interest to be paid to bondholders
DFL
Degree of financial leverage
I
Example
Calculate the financial leverage ([DFL]) for a company that earns $400,000 before interest
and taxes ([EBIT]), $80,000 of which is paid to bondholders ([INT]).
• You can also calculate earnings before interest and taxes ([EBIT]) or interest to be paid to
bondholders ([INT]) by inputting the other two values and tapping the button for the result
you want.
Calculation Formula
s
EBIT
–
ITR
DFL
=
EBIT
Summary of Contents for ClassPad 330
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