Credit Analysis – Detailed Course Description
ii. Fixed and variable costs and their impact on leverage
2. BREAKEVEN AND LEVERAGE
i. Breakeven Analysis
ii. Margin of Safety
3. FIXED COSTS AND OPERATING LEVERAGE
i. Operating Leverage
ii. Degree of Operating Leverage
iii. The downside of operating leverage
4. FINANCIAL LEVERAGE
i. Introducing Financial Leverage
ii. Degree of Financial Leverage
iii. The downside of Financial Leverage
5. COMBINING FINANCIAL AND OPERATING LEVERAGE
This is the first course on credit analysis that focuses on the impact of leverage on a business. We look at two different instances of leverage – one financial, one operational and use that to calculate degrees of operational leverage. Degrees of operational leverage is an interesting concept that allows you to measure the impact on earnings for every dollar increase/decrease in sales on account of the combined leverage of a firm.
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