User Account

All Pages

Calculate the degree of operating leverage

Assignment Help Finance Basics
Reference no: EM132485181

Hickory Building Materials' current statement contains the following information (in millions):

Sales $ 75.0

Less: Variable costs 40.0

Revenue before fixed costs 35.0

Less: Fixed Costs 15.0

EBIT 20.0

Less: Interest 4.0

EBT 16.0

Less: Taxes @ 40 percent 6.4

Earnings After Tax $ 9.6

There are 3 million shares of common stock outstanding.

a) Calculate the Degree of Operating Leverage.

b) Calculate the Degree of Financial Leverage.

c) Calculate the Degree of Total Leverage.

d) A 5 percent increase in sales (at this base level) will result in what EPS ?

Reference no: EM132485181

Questions Cloud

Compute pv of perpetuity : 1. Find PV of Perpetuity where PMT = $7000, Rates = 5%. 2. Find FV of $700 ordinary Annuity payment over 7 years @ 5% interest.
Discuss elements such as texture and line : Use descriptive and precise language to capture all aspects of the artwork as you experienced it. Discuss elements such as texture, shape, color, and line.
What is the estimate for the expected stock price : What is the estimate for the expected stock price for the stock in one year's time?
Write entry for cost of goods sold using individual item : Prepare and Show the value of the ending inventory using the lower-of-cost-or-market rule applied to (1) each individual inventory item
Calculate the degree of operating leverage : Hickory Building Materials' current statement contains the following information (in millions):
How the european union law has impacted it policy : The General Data Protection Regulation (EU) 2016/679 (GDPR) is a regulation in EU law on data protection and privacy for all individual citizens.
How retained earnings should increase or decrease by : Determine How retained earnings should increase or decrease by? During the period, a 10% stock dividend was declared and distributed.
Continuing residual income and the persistence factor : What are the three common assumptions made by analysts concerning the continuing residual income and the persistence factor?
Make all journal entries necessary on those three dates : Pearl securities are to be distributed on October 23, 2018, to stockholders of record on October 8 2018. Make all journal entries necessary on those three dates

Reviews

Write a Review

Finance Basics Questions & Answers

  How long must the new lining last to be more economical

The lining of a plating tank must be replaced every 3 years at the cost of approximately $2000. A new lining material has been developed that is more resistant.

  Nominal value of an asset appear on the income statement

Does the inflation-related increase in the nominal value of an asset appear on the income statement?

  Sold merchandise to wally butler who paid the 1300 purchase

sold merchandise to wally butler who paid the 1300 purchase with cash. the goods cost evergreen company 871. 15 sold

  How much investment interest can murphy deduct

Murphy has a brokerage account and buys on the margin, which resulted interest expense of $24, 400 during the year. Income generated through the brokerage.

  Cost of retained earnings

Weir Inc. has a target capital structure of 40% debt, 20% preferred, and 40% common equity. The interest rate on new debt is 6.50%, the yield on the preferred is 6.00%, the cost of retained earnings is 9.6%, and the tax rate is 40%. The WACC for..

  What happens to the homeowner risk

Explain how. What happens to the homeowner's risk as the down payment on the house rises from 30 percent to 60 percent?

  Should you accept or reject the project

A project has the following cash flows. Knowing that the required rate of return is 15%, should you accept or reject the project?

  Select a health care organization with which you are at

planning and budgetingselect a health care organization with which you are at least somewhat familiar e.g. your local

  Compute what is the present value of the given annuity

What is the present value of the following annuity? $2,395 every quarter year at the end of the quarter for the next 8 years, discounted back to the present at 5.67 percent per year, compounded quarterly?

  Compute the value of preferred stock

Medco Company can sell preferred stock for $80 with an estimated flotation expense of $3. It is anticipated that the preferred stock will pay $6 per share in dividends.

  Fixed rate payment liability to manage interest rate risk

1. Borrowing costs of two companies, A and B, in the fixed rate and floating rate markets are given below. Company B is a project and has raised floating-rate funds. It is looking into swapping its floating payment liabilities for fixed rate payment ..

  What should be the market price of moriband stock

If investors in stocks of companies like Moriband require a rate of return of 17 percent, what should be the market price of Moriband stock?

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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