Estimate the level of operating income

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Question -

A. Using the Eastnorth Manufacturing financial statement attached, Estimate its external financing needs if a 10% growth in sales is expected and the firm pays out one-half of its earnings as dividends.

B. Using the Financial statement, Determine Eastnorth manufacturing degree of operating leverage in each of the years presented. Assume the cost of goods sold is variable and all other costs are fixed.

C. Using your estimate for the degree of operating for Eastnorth in 2020, Estimate the level of operating income if the following year's sales rise by 5%, or if the following year's sales fall by 12%.

Reference no: EM133166236

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