Leverage calculation

1. For Leverage
There are two companies A Ltd. and B Ltd., having the total capitalization of Rs. 10,000
each as per the details below
A Ltd. B Ltd.
Equity Share 1,000 9,000
(Shares of Rs. 10 Each)
10%Debenture 9,000 1,000
10,000 10,000
Profitability statements of both the companies when sales are Rs.20,000 and Rs. 18,000
are as below considering 50% rate of tax
Particulars
A Ltd. B Ltd.
Sales 20,000 18,000 20,000 18,000
Less: Variable Cost 10,000 9,000 10,000 9,000
Contribution 10,000 9,000 10,000 9,000
Less: Fixed Cost 5,000 5,000 5,000 5,000
EBIT 5,000 4,000 5,000 4,000
Less: Interest on Debentur 900 900 100 100
Earnings Before tax(EBT) 4,100 3,100 4,900 3,900
Less: Tax 2,050 1,550 2,450 1,950
Earnings after tax(EAT) 2,050 1,550 2,450 1,950
No. of Equity Share 100 100 900 900
Earnings Per share (EPS) 20.50 15.50 2.72 2.16