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This tutorial covers the most important aspects of the Financial Leverage Ratio. You will learn precisely what the Financial Leverage Ratio is, how to calculate it, and how to interpret the findings. Using the Colgate Case Study, we will also go over how to calculate Financial Leverage in Excel. You can download the Colgate Financial Leverage template from this link – https://www.wallstreetmojo.com/ratio-analysis-template/What is Financial Leverage?——————————————–The financial leverage ratio is used to determine the impact of debt on a company’s total profitability. A high ratio indicates that the fixed costs of running the firm are high, while a low ratio indicates that the fixed costs of running the business are low. Formula——————————————–Financial leverage Formula = % change in Net Income / % change in EBIT Interpretation——————————————— The more debt a company has, the greater its financial leverage.- Data from the last five to ten years should be used to determine financial leverage. For more details, you can refer to our article – https://www.wallstreetmojo.com/financial-leverage/ Connect with us! YouTube https://www.youtube.com/channel/UChlNXSK2tC9SJ2Fhhb2kOUwLinkedIn https://www.linkedin.com/company/wallstreetmojo/mycompany/Facebook https://www.facebook.com/wallstreetmojoInstagram https://www.instagram.com/wallstreetmojoofficial/?utm_medium=copy_linkTwitter https://twitter.com/wallstreetmojo
Can you get a tax deduction for paying a prostitute?In 2004 and 2005, a tax lawyer named deducted more than $100,000 he had paid to prostitutes for services rendered. He categorized this as a medical expense per § 213 of the tax code. He described it as “sex therapy”Now, § 213(a) does allow a deduction for medical/dental expenses. But the Treasury Regulations say you can’t get a deduction for illegal medical treatments. Since prostitution was illegal in the taxpayer’s state of New York, the Tax Court disallowed the deductionThe taxpayer also tried to deduct several thousand dollars for pornographic materials, but the Tax Court said that didn’t count as a medical expense either. The materials weren’t prescribed by a doctor, and were thus a personal expense. And the tax code doesn’t give many deductions for personal expensesSo, if you want to deduct the cost of sex therapy:• It needs to be legal in your state• It needs to be prescribed by a doctor— Edspira is the creation of Michael McLaughlin, an award-winning professor who went from teenage homelessness to a PhD. Edspira’s mission is to make a high-quality business education accessible to all people.— SUBSCRIBE FOR A FREE 53-PAGE GUIDE TO THE FINANCIAL STATEMENTS, PLUS: • A 23-PAGE GUIDE TO MANAGERIAL ACCOUNTING• A 44-PAGE GUIDE TO U.S. TAXATION• A 75-PAGE GUIDE TO FINANCIAL STATEMENT ANALYSIS• MANY MORE FREE PDF GUIDES* http://eepurl.com/dIaa5z— HIRE MICHAEL MCLAUGHLIN, PHD, CPA * https://michaelmclaughlin.com/hire-me — GET CERTIFIED IN FINANCIAL STATEMENT ANALYSIS, IFRS 16, AND ASSET-LIABILITY MANAGEMENT * https://edspira.thinkific.com — LISTEN TO THE SCHEME PODCAST * Apple Podcasts: https://podcasts.apple.com/us/podcast/scheme/id1522352725 * Spotify: https://open.spotify.com/show/4WaNTqVFxISHlgcSWNT1kc * Website: https://www.edspira.com/podcast-2/ — GET TAX TIPS ON TIKTOK * https://www.tiktok.com/@prof_mclaughlin — ACCESS INDEX OF VIDEOS * https://www.edspira.com/index — CONNECT WITH EDSPIRA * Facebook: https://www.facebook.com/Edspira * Instagram: https://www.instagram.com/edspiradotcom * LinkedIn: https://www.linkedin.com/company/edspira — CONNECT WITH MICHAEL * Twitter: https://www.twitter.com/Prof_McLaughlin * LinkedIn: https://www.linkedin.com/in/prof-michael-mclaughlin — ABOUT EDSPIRA AND ITS CREATOR * https://www.edspira.com/about/
In this tutorial, we’ll go over the finer details of Operating Leverage, including its meaning, formula and step-by-step calculations. After that, we will use the Colgate Case Study to compute Operating Leverage and interpret the results. You can download the Colgate Operating Leverage template from this link – https://www.wallstreetmojo.com/ratio-analysis-template/What is Operating Leverage?——————————————–Operating leverage is an accounting metric that assists analysts in analyzing how a company's operations are related to its revenues. Moreover, the ratio details how much of an increase in operating profit the company will have with a specific percentage increase in sales – emphasizing the predictability of sales.Formula——————————————–Degree of Operating Leverage Formula = % change in EBIT / % change in Sales.Interpretation——————————————— Lower Operating Leverage means higher variable costs and lower fixed costs. In this situation, abusiness must generate a minimum level of sales to pay its fixed costs. It can earn additional profit in terms of Selling Price minus Variable Cost until it achieves the break-even point, where all of its fixed costs are covered.- Lower variable expenses and higher fixed costs are associated with higher operating leverage. Thebreak-even point will be higher in this case since the fixed costs are higher. The benefit is that once the break-even point is reached, the company will be able to earn a greater profit on each product because the variable cost is low.For more details, you can refer to our article – https://www.wallstreetmojo.com/operating-leverage/Connect with us!YouTube https://www.youtube.com/channel/UChlNXSK2tC9SJ2Fhhb2kOUwLinkedIn https://www.linkedin.com/company/wallstreetmojo/mycompany/Facebook https://www.facebook.com/wallstreetmojoInstagram https://www.instagram.com/wallstreetmojoofficial/?utm_medium=copy_linkTwitter https://twitter.com/wallstreetmojo