About the income statement

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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.

Reference no: EM13846352

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