MANAGEMENT

Detailed explanation-1: -Combined leverage is the blend of the two leverages, i.e. financial leverage and operating leverage. While operating leverage outlines the impact of progress or effects of change in sales on the organisation’s working income or operating earnings, financial leverage mirrors the adjustment of EBIT on the EPS level.

Detailed explanation-2: -Operating leverage is an indication of how a company’s costs are structured. The metric is used to determine a company’s breakeven point, which is when revenue from sales covers both the fixed and variable costs of production. Financial leverage refers to the amount of debt used to finance the operations of a company.

Detailed explanation-3: -Degree of combined leverage = Degree of operating leverage * Degree of financial leverage.