Preparing common-sized income statement

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Reference no: EM131978751

1. When you're preparing a common-sized income statement, which of the follwoing measures is set to equal 100 percent?

A. Net income

B. Assets

C. Sales

D. Cost of goods sold

2. Variable costs are 70% of Sales and Fixed costs are $400,000. The firm has $2,000,000 in debt with in interest rate of 5%. At what level of Sales will their Degree of Combined Leverage equal 4?

a) $2,500,000 b) $2,666,667 c) $ 3,333,333 d) $4,000,000

Reference no: EM131978751

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