Solution-Calculate financial leverage gain or loss for the

Calculate financial leverage gain or loss for the year

Reference no: EM13534424

Assume the following: Company B's Sources of Capital: See table for Company B's operating profit performance for the year. The business paid $480,000 interest for the year. Calculate its financial leverage gain (or loss) for the year.

	Company B		Company C
	Totals	Per Unit	Totals	Per Unit
Sales volume, in units	50,000		1,500,000
Sales revenue	$15,000,000	$300.00	$36,000,000	$24.00
Cost of goods sold expense	$7,500,000	$150.00	$27,000,000	$18.00
Gross margin	$7,500,000	$150.00	$9,000,000	$6.00
Variable operating expenses	$3,750,000	$75.00	$4,200,000	$2.80
Contribution margin	$3,750,000	$75.00	$4,800,000	$3.20
Fixed operating expenses	$1,950,000	$39.00	$3,000,000	$2.00
Operating profit	$1,800,000	$36.00	$1,800,000	$1.20

Reference no: EM13534424

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Calculate financial leverage gain or loss for the year

Reference no: EM13534424

Reference no: EM13534424

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