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The calculation of leverage ratios in Management Accounting requires the relevant financial particulars, such as sales, variable cost, fixed operating cost, EBIT, interest, contribution, and capital employed. However, the particulars referred to in the question have not been provided. Leverage ratios are generally used to measure the effect of fixed costs and fixed financial charges on the profitability of a business. The main leverage ratios are Operating Leverage, Financial Leverage, and Combined Leverage. Operating Leverage measures the relationship between contribution and operating profit. It arises because a business has fixed operating costs. It indicates ______ _____ _____ ______ ___ ________ ___ __________ __________ __________ ___ ____.
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