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RELIANCE INFRASTRUC

OPERATING LEVERAGE

 YEAR 2004 2005 2006 2007 2008

EBIT 334.34 663.53 866.75 1137.21 1556.91

% change in EBIT 98.46 30.63 31.2 36.91

SALES 3512.73 4151.22 3943.41 5752.5 6101.04

% change in SALES 18.18 -5.01 45.88 6.06

DOL = 5.42 -6.12 0.68 6.09

% change in EBIT/ % change in SALES

the DOL exceeds 1 in this company in the year 2005. so in this year the operating leit again increases in the year 2008. this happens because of the recession . DOL ag

2005 2006 2007 2008 2009

-20

20

40

60

80

100

120

% change inEBIT

% change inSALES

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URE LIMITED

2009

1583.35

1.7

9759.78

59.97

0.03

verage exists. This is because of the fixed cost. A high leverage company is at high risk. Tin decreases in the year 2009.

2005 2006 2007 2008 2009

-8

-6

-4

-2

2

46

8

OPERATING LEVERA

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e DOL decreases in the following years

E

OPERATINGLEVERAGE

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RELIANCE INFRASTRUCTURE LIMITED

FINANCIAL LEVERAGE

 YEAR 2004 2005 2006 2007 2008 2009

EPS 20.96 28.03 34.42 35.69 42.08 47.19

% change in EPS 33.73 22.8 3.69 17.9 12.14EBIT 334.34 663.53 866.75 1137.21 1556.91 1583.35

% change in EBIT 98.46 30.63 31.2 36.91 1.7

DFL 0.34 0.74 0.12 0.49 7.15

we can see in this company that the DFL remains less than 1 during four cons

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ecutive years. And it increases in the year 2009. hence we can say that the company had

2005 2006 2007 2008 2009

1

2

3

4

5

6

7

8

FINANCIAL LEVERAGE

FINANCIALLEVERAGE

2005 2006 2007 2008 2009

20

40

60

80

100

120

% change inEPS

% change inEBIT

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orrowed very less amount of money from outside during the period 2005-2008. and in the

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last year the debt has increased.

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 TOTAL LEVERAGE

 YEAR 2004 2005 2006 2007 2008 2009

OPERATING LEVERAGE 5.42 -6.12 0.68 6.09 0.03

FINANCIAL LEVERAGE 0.34 0.74 0.12 0.49 7.15

 TOTAL LEVERAGE 1.86 -4.55 0.08 2.96 0.2

we can see that in the year 2005 the DOL is more and the DFL is less so the total

less because of the low DFL. And in the year 2009 the DOL is less and the DFL is

but the total leverage is again get reduced. For the year 2005 it can be said that

sales , it will result in 1.85 % change in the EPS in the direction of change in sale

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l leverage is also

more than 1

for 1 % change

s in this year.

2005 2006 2007 2008 2009

-5

-4

-3

-2

-1

1

23

4

TOTAL LEVERAGE

 TOTALLEVERAGE