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Calculate the degree of operating leverage

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Reference no: EM132763491

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Q1 - Abreviated Income Statement $thousands, except EPS 31-Dec-20 31-Dec-19 Total Revenue 1,743,641 781,963 Cost of Goods Sold 431,725 278,433 Gross Profit 1,311,916 503,530 Operating Expenses 68,470 52,402 Operating Income 1,243,446 451,128 Interest & Taxes 453,190 293,537 Net Income 790,256 157,591 EPS, 50,000,000 shares outstanding 15.81 3.15 (Round all answers to two decimals, i.e. 12.00)

a) Calculate the degree of operating leverage (DOL).

b) Calculate the degree of financial leverage (DFL).

c) Calculate the degree of combined leverage (DCL).

Q2 - What do the degree of operating leverage (DOL, degree of financial leverage (DFL), and degree of combined leverage (DCL) You obtained in the previous question mean? Explain fully using your results.

Reference no: EM132763491

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