Chapter 6: source and coverage limits

# FM6 concept/source boundaries
Official PDF: https://resource.cdn.icai.org/87742bos-28082025-ch6.pdf . Concepts read: risk and change ratios, volume DOL/CVP/MOS, financial leverage/preference claims, trading on equity/double-edge, combined leverage and inverse income reconstruction.
Sensitivity assumes stable price, contribution/unit or mix, operating fixed cost relevant range, fixed finance claims, shares and explicitly stated tax regime. Price changes, step costs or tax-boundary crossings require direct scenario levels. Negative denominator percentages need sign interpretation; zero earnings base is undefined, not a measured finite/infinite coefficient.
Page18 broad DFL-range statement is not universal over negative EBIT. In a no-tax negative-EBIT extension EBIT -2 and interest3 gives DFL .4. Preserve scope rather than claim current official erratum. Page20 low-DOL/high-DFL "best combination" is qualitative, not universal value/risk/cash recommendation.
Page22 labels ROI but expressly says it is calculated as ROE. Exercises distinguish pre-tax EBIT/total book capital from after-tax ordinary earnings/equity; no silent denominator substitution. Preference dividends tax-adjusted in financial/combined leverage. No loss-tax relief unless case explicitly supplies it; not current-law assurance.
Inconsistent exact DFL/interest inputs are flagged, not invented actual extra liabilities. Rounded ratios allow intervals; use underlying incomes where possible. Operating BEP differs financial EPS-BEP and neither certifies principal/capex/working-capital payment capacity. EPS/ROE improvement not guaranteed market wealth.
Private original indicative capped marking, not official reproduced question/answer completion. No deployment, G1, old reviewledger, Auth/Firestore or money changes.