Hey Mate !
EBIT to become zero means 100% reduction in EBIT.
Financial Leverage=EBIT/EBIT=27,00,000/ 22,95,000 =1.1765
Operating Leverage=Contribution/EBIT = 33,00,000 /27,00,000=1.2222
Combined Leverage = 1.1764 x 1.2222= 1.438
Sales have to drop by 100/1.438 = 69.54%
New Sales will be = 7500000 x (1-0.6954) = ` 22,84,500(approx)
Hope it helps u !
#Keep smiling :)
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Answers & Comments
Hey Mate !
EBIT to become zero means 100% reduction in EBIT.
Financial Leverage=EBIT/EBIT=27,00,000/ 22,95,000 =1.1765
Operating Leverage=Contribution/EBIT = 33,00,000 /27,00,000=1.2222
Combined Leverage = 1.1764 x 1.2222= 1.438
Sales have to drop by 100/1.438 = 69.54%
New Sales will be = 7500000 x (1-0.6954) = ` 22,84,500(approx)
Hope it helps u !
#Keep smiling :)