Computation of degree of financial leverage

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Reference no: EM1310295

Computation of Degree of operating leverage, financial leverage, degree of combined leverage.

I have a problem on fixed operating cost they are 5.8 million as it variable cost ratio is 0.20 the firm has$2 million on bonds outstanding with a coupon interest rate of 8%. They have 30,000 shares of preferred stock outstanding which pays$2 annual dividend there are 100,000 shares of common stock outstanding. Revenues for the firm are$8 million and the firm is in the 40 percent income tax bracket. I need to compute degree of operating leverage and financial leverage and to compute the degree of combined leverage and interpret the value. Can you help me what equations to use?

Reference no: EM1310295

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