Integrative-multiple leverage measures

Assignment Help Financial Management

Reference no: EM131931870

Integrative—Multiple leverage measures

Play-More Toys produces inflatable beach? balls, selling 420,000 balls per year. Each ball produced has a variable operating cost of $ 0.82 and sells for $ 1.15.

Fixed operating costs are $31,000. The firm has annual interest charges of $6,300? preferred dividends of $1,700? and a 40% tax rate.

a. Calculate the operating breakeven point in units.

b. Use the degree of operating leverage? (DOL) formula to calculate DOL.

c. Use the degree of financial leverage? (DFL) formula to calculate DFL.

d. Use the degree of total leverage? (DTL) formula to calculate DTL. Compare this to the product of DOL and DFL calculated in parts ?(b?) and ?(c?).

Reference no: EM131931870

Questions Cloud

The stock price and to the convertible bond price : What would happen (1) to the stock price and (2) to the convertible bond's price?

What is the value of each warrant attached to bond issue : If investors pay $1,000 for each bond, what is the value of each warrant attached to the bond issue?

What is modified duration : What is the Macaulay duration of a bond with a coupon of 8.2 percent, ten years to maturity, and a current price of $1,039.10? What is the modified duration?

What is projected dividend for coming year : The required return on this stock is 11 percent, and the stock currently sells for $60 per share. What is the projected dividend for the coming year?

Integrative-multiple leverage measures : Calculate the operating breakeven point in units. Use the degree of operating leverage? (DOL) formula to calculate DOL.

Use the free cash flow approach to value the firm equity : Use the free cash flow approach to value the firm's equity.

Qualify for under traditional mortgage lending standards : How much of a monthly principal and interest payment will you qualify for under traditional mortgage lending standards?

Calculate the resulting dividend payout ratio : Apply the residual theory to determine what? dividends, if?any, can be paid? out, and calculate the resulting dividend payout ratio.

Service department costs using direct distribution method : Distribute the service department costs using the direct distribution method. Human Resources uses Labor Hours and Maintenance uses Square Footage.

User Account

All Pages