Calculate the degree of financial leverage

Assignment Help Financial Management

Reference no: EM131461834

Use the following information about Rat Race Home Security, Inc. to answer the questions:

Average selling price per unit $318.

Variable cost per unit $187

Units sold 328

Fixed costs $9,145

Interest expense 14,891

Based on the data above, what will be the resulting percentage change in earnings per share of Rat Race Home Security, Inc. if they expect operating profit to change -5.0 percent?

(You should calculate the degree of financial leverage first).

(Write the percentage sign in the "units" box).

Round the answer to two decimals

Reference no: EM131461834

Questions Cloud

What is contributing to the change in profit : You run a lab that performs a single blood test that calculates an overall 'wellness' assessment, What is contributing to the change in profit?

Firm three year payback requirement : Leo is considering adding deli to his general store. The remodeling expenses and shelving costs are estimated at $2,500. Leo has firm 3-year payback requirement

Use of the present value free cash-flow method : Create an argument that use of the present value free cash-flow method has a more beneficial economic meaning than earnings-based methods.

How the free cash-flow method can be used when company : how the free cash-flow method can be used when a company is profitable yet the cash-flow values are expected to be negative over the next five years,

Calculate the degree of financial leverage : what will be the resulting percentage change in earnings per share of Rat Race Home Security, Inc. if they expect operating profit to change -5.0 percent?

Which cash-flow variables are most sensitive to change : Assess which cash-flow variables are the most sensitive to change and the likely impact on a firm’s valuation.

Beneficial economic meaning than earnings-based methods : Create an argument that use of the present value free cash-flow method has a more beneficial economic meaning than earnings-based methods.

Contracts are not as strictly construed : In many other countries, contracts aren’t as strictly construed and don’t contain all of the terms of an agreement as they do in the United States.

Marginal cash flow for expected additional development cost : What is the marginal cash flow for the expected additional development costs to include in the evaluation of the compact battery project?

User Account

All Pages