Reference no: EM13846352
The Sterling Tire Company's income statement for 2013 is as follows:
Sterling Tire Company
Income Statement
For the Year Ended December 31,2013
Sales (20,000 tires at $60 each) 1,200,000 Less: Variable costs (20,000 tires at $30 600,000 Fixed Costs 400,000 Earnings before interest and taxes (EBIT) 200,000 Interest expense 50,000 Earnings before taxes (EBT) 150,000 Income tax expense (30%) 45,000 Earnings after taxes (EAT) 105,000
Given this income statement, compute the following:
a. Degree of operating leverage.
b. Degree of financial leverage.
c. Degree of combined leverage.
d. Break-even point in units.
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