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FINANCIAL MANAGEMENT BY R.MADHANA GOPAL (10AA18)

Financial management

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  • 1. FINANCIAL MANAGEMENT BYR.MADHANA GOPAL (10AA18)

2. DEGREE OF LEVERAGE ANALYSIS

  • BHARTI AIRTEL LTD

3. INTRODUCTION

  • Bharti Airtel Limited , usually referred to simply as " airtel ", is a Indiantelecommunicationscompany that operates in 19 countries acrossSouth Asia ,Africaand theChannel Islands .
  • Airtel is thefifth largest telecom operator in the worldwith over 207.8 million subscribers across 19 countries at the end of 2010.
  • It is the largest cellular service provider inIndia , with over 152.5 million subscribers at the end of 2010.
  • Airtelbrand and is headed bySunil Bharti Mittal . Bharti Airtel is the first Indian telecom service provider to achieve this Cisco Gold Certification. To earn Gold Certification, Bharti Airtel had to meet rigorous standards for networking competency, service, support and customer satisfaction set forth byCisco .

4. P & L CONSOLIDATED - BHARTI AIRTEL LTDAS ON 05/02/2011 5. STATEMENT CONTAINING DEGREE OF OPERATING LEVERAGE 6. The formula used to solve are as follows:-

  • DOL (Degree of Operating Leverage] = Contribution/EBIT.
  • Variable Cost =Power & Fuel Cost + Miscellaneous Expenses + Raw Materials.
  • Fixed Cost=Employee Cost +Other Manufacturing Expenses + Selling and Administration Expenses.

7. Analysis

  • There is no operating leverage if DOL=1.
  • Degree of leverage depends on the fixed operating costs of the company, larger the fixed operating costs, the higher is the firms operating leverage and its operating risk.
  • When firm has increased fixed operating costs, an increase in sales volume results in a more than proportionate increase in EBIT.
  • In 2006 DOL is high(2.6251) for the company and it is decreased for the other years rapidly.
  • The company has efficiently utilized its fixed operating costs to keeps the sales volume high and increases its profit.

8. THANK YOU