Reference no: EM132846161
Question - The Harding Company manufactures skates. The company's income statement for 20X1 is as follows:
HARDING COMPANY Income Statement For the Year Ended December 31, 20X1
Sales (11,000 skates @ $70 each) $770,000
Variable costs (11,000 skates at $30) 330,000
Fixed costs 250,000
Earnings before interest and taxes (EBIT) $190,000
Interest expense 65,000
Earnings before taxes (EBT) $125,000
Income tax expense (20%) 25,000
Earnings after taxes (EAT) $100,000
Required -
a. Compute the degree of operating leverage.
b. Compute the degree of financial leverage.
c. Compute the degree of combined leverage.
d. Compute the break-even point in units (number of skates).