Homework Help: Finance

Posted by SEWmi on Wednesday, December 1, 2010 at 3:16am.

You are a finance manager in Big Pen Ltd. The degree of operating leverage of your company is 5' The degree of financial leverage of your company is 3. your Managing
Director has found that the degree of operating leverage and the degree of financial
leverage of your nearest competitor small Pen Ltd. are 6 and 4 respectively. In his
opinion' the Small Pen Ltd. is better than that of Big pen Ltd. because o f higher value
of degree of leverages' Do you agree with the opinion of your Managing Director?
Give reasons.

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