Leverage-Financial Management

This would be useful for those who are pursuing their CS Professional Program.

Leverage: An advantage derived indirectly i.e using one thing to derive a benefit on another thing.

There are three kinds of leverages:

a) Operating Leverage.

b) Financial Leverage.

c) Combined Leverage.

Operating leverage can be computed using the following formula:

Contribution/Earning before interest and tax(EBIT)

Financial Leverage can be computed using the following formula:

Earning before interest and tax(EBIT)/ earning before tax(EBT)

Combined Leverage can be computed using the following formula:

Financial Leverage * Operating Leverage

From the following table we can understand how to compute contribution , EBIT and EBT.

Particulars                                                           Amount

Sales                                                                   

Less: Variable cost                                             

Contribution                                                       

Less: Fixed cost                                                   

EBIT                                                                    

Less : Interest on borrowed funds                        

EBT                                                                     

Less: Tax                                                             

Profit after tax                                                    

Less: Preference share dividend                          

Profit available for Equity shareholders              

My view on the case filed against Hindustan Pencils Ltd

http://www.thehindu.com/todays-paper/tp-national/law-student-sues-company-over-racist-crayon/article4793506.ece

Hindustan pencils have a crayon named skin color, and this has hurt the sentiments of an individual who's skin tone does not match the color used in that crayon. Everyone has a right to seek action against someone else's action which has offended them. But the question here is, whether it's worth getting offended here in this situation or not.

Some questions which came to my mind when I read the article are :

a) Does the company endorse the used skin color as a superior one?
b) Does the company say that the used skin color is the only ideal skin color?
c) Does the company say that the used skin color is the only skin color under the sun?
d) Does the company relate an individual's personal attributes to the color of the skin?
e) What skin are they talking about here? Human skin? Animal skin?
f) Which layer of the skin were they referring to?

May be the usage of the word skin can be challenged on a ground that it refers to a human organ(http://en.wikipedia.org/wiki/Human_skin) and such reference should not be used. It is like calling a black color car as hair color car. And this can be offensive to some people as they might feel sick using a product which refers to a human part.

The article speaks about how in the USA, flesh color was replaced with peach. Well black and white are two terminologies used to refer to Black skin and White skin humans, would you sue consumer goods manufacturers who have products colored Black and White saying that they are racists?

In India, so far, I have never come across someone distinguishing an other using Black, Brown etc. There is caste based discrimination, language based, region based, but I have never seen color based discrimination.

Why should well educated people waste their valuable time suing companies over this?

There are bad roads, bad drainage, bad governance for which we can sue.

And for the part in the article, which speaks about companies selling skin lightening products, yes if they put up advertisements, which show a person with a fair skin has a better chance to clear an interview or get into a college then yes they should be sued, as such ads are offensive and can affect the mindset and confidence of youngsters.