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Determine and explain the degree of combined leverage

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Question - Firms from Japan often employ both operating and financial leverage because of the use of modern technology and close borrower-lender relationships. Assume the Yokohama Company has a saes volume of 125,000 units at a price of P25 per unit, variable costs are P5 per unit and fixed costs are P1,800,000, interest expense is P400,000 and a total assets of P100 million. Determine and explain the degree of combined leverage for this firm.

Reference no: EM132893271

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