Calculate degrees of financial leverage-composite leverage

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The last gasp water company sells water by the gallon for a price of $0.75 per gallon. Fixed costs for the company are $200,000 and variable costs are $0.40 per gallon. The company already has $2,000,000 of 10% bonds on its balance sheet. Calculate the degrees of financial leverage, operating leverage, and composite leverage at 3,000,000 and 7,000,000 gallons of sales, interpret the results and prove that the results are accurate. The company pays the normal tax rate for corporations.

Reference no: EM13915387

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