Calculate firm degree of operating leverage

Assignment Help Financial Management
Reference no: EM131993250

Two firms, A and B, both produce brushes. The price of brushes is $1.30 each. Firm A has total fixed costs of $450,200 and variable costs of 50 cents per brush. Firm B has total fixed costs of $260,000 and variable costs of 72 cents per brush. The corporate tax rate is 30%. If the economy is strong each firm will sell 1,502,000 brushes. If the economy enters a recession, each firm will sell 979,000 brushes. Calculate Firm A's degree of operating leverage.

Reference no: EM131993250

Questions Cloud

Market rate of return on similar securities : What is one share of this stock worth today if the market rate of return on similar securities is 11.2 percent?
Prepare a memo to the president of eec : Calculate net present value (NPV), internal rate of return (IRR), and payback for the investment opportunity
Calculate the financing cost of these bonds : Calculate the financing cost (in percent) of these bonds.
Write a reflective essay about english class portfolio : Please help me write a reflective essay about my English class Portfolio. All the information are attached below. If you need some background from me to write.
Calculate firm degree of operating leverage : Two firms, A and B, both produce brushes. If the economy enters recession, each firm will sell 979,000 brushes. Calculate Firm A's degree of operating leverage.
How technologies or information systems have contributed : Considering your chosen topic, prison violence a two (2) page paper in which you:
Dealt with in ancient greco-roman myths : How are matriarchy and patriarchy dealt with in ancient Greco-Roman myths?
The value of the short position : You are bearish on Telecom and decide to sell short 150 shares at the current market rate of $65 per share.
Consideration by all scholarship programs : In the box below, briefly explain your reasons for submitting this application. Discuss each of the following topics:

Reviews

Write a Review

Financial Management Questions & Answers

  Debit card service fees deducted from the business bank

A retailer has 5% credit/debit card service fees deducted from the business's bank account on a monthly basis. The retailer has $43,500 in sales for month.

  More on ratio analysis-use return on equity

Analysts and investors often use return on equity (ROE) to compare profitability of a company with other firms in the industry. ROE is considered a very important measure, and managers strive to make the company’s ROE numbers look good. Based on your..

  Important for managers of corporations to act ethically

It is important for managers of corporations to act ethically?

  Company purchases a combination of the three bonds

The insurance company purchases a combination of the following three bonds at a total cost of X in order to match its obligation:

  What will be yield to lender if it is repaid after 8 years

How much will be due at the end of 10 years?- What will be the yield to the lender if it is repaid after 8 years?- If 1 point is charged in (b) what will be the yield to the lender?

  The incremental free cash flow during year one of project

QRW Corp. needs to replace an old lathe with a new, more efficient model. The old lathe was purchased for $50,000 nine years ago and has a current book value of $5,000. The new lathe is expected to be sold fro $5,000 at the end of the project’s ten-y..

  Describe the two general types of subsequent events

Describe the two general types of subsequent events. What is the auditors' responsibility with respect to detecting subsequent events?

  Shareholders equity after the cash dividend payment

TIM Corporation had 2,200,000 shares outstanding at the beginning of the year, with a common stock book value of $7,150,000. TM’s retained earnings at the start of the year were $2,000,000. Determine retained earnings and total shareholders’ equity a..

  The capital markets are rigged or lack integrity

Do you believe the capital markets are rigged or lack integrity?

  Cash flows project

Consider projects A and B: Cash Flows (dollars) Project C0 C1 C2 NPV at 10% A -37,500 27,000 27,000 + $9,360 B -57,500 40,500 40,500 + 12,789.

  What conditions for the population and the study design

What conditions for the population and the study design are required by the procedure you used in (a)? Which of these conditions are important for the validity of the procedure in this case?

  What is the center average inventory of solution bags

What is the economic order quantity? What is the center's average inventory of IV solution bags?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd