The degree of financial leverage

Assignment Help Financial Management
Reference no: EM131312285

A summarized income statement for Leveraged Inc. is presented below.

Sales $1,000000 Cost of sales 600,000 Gross profit 400,000 operating expenses 250,000 Operating Income 150,000 Interest expense 30,000 Earnings before taxes 120,000 Income tax 40,000 Net income 80,000

The degree of financial leverage is?

Reference no: EM131312285

Questions Cloud

Ranking of securities based on volatility of annual returns : Which one of the following is a correct ranking of securities based on the volatility of their annual returns over the period of 1926-2013?
What is nominal annual and effective annual interest rate : A student bought a $75 used guitar today and agreed to pay for it $85 six months later. Assuming semi-annual (every six months) compounding, what is the nominal annual interest rate? What is the effective annual interest rate?
What is the value of stock when the required return : Financial analysts forecast ABC Inc. growth for the future to be 12%. ABC's recent dividend was $1.50. What is the value of ABC stock when the required return is 15%?
Compute the debt-equity ratio : Joseph and John Inc. had the following balance sheet results for 2006: (in millions). Current liabilities $12.6 Bonds payable 18.6 Lease obligations 2.7 Minority interest 1.4 Common stock 8.6 Retained earnings 22.9. Compute the debt-equity ratio (do ..
The degree of financial leverage : A summarized income statement for Leveraged Inc. is presented below. Sales $1,000000 Cost of sales 600,000 Gross profit 400,000 operating expenses 250,000 Operating Income 150,000 Interest expense 30,000 Earnings before taxes 120,000 Income tax 40,00..
Canadian dollars needed to purchase his raw materials : Suppose that a Japanese importer agrees to purchase raw materials from Canada. The importer agrees to purchase the raw materials for C$650,000. The importer's bank provides the following qoutes for Canadian dollars: ¥= C$.0085-.0091. How many yen wil..
Stock market is efficient and the stocks are in equilibrium : Stocks A and B haver the following data. Assuming the stock market is efficient and the stocks are in equilibrium,
What is the market price per bond if face value : Oil Well Supply offers a 8 percent coupon bond with semiannual payments and a yield to maturity of 8.73 percent. The bonds mature in 9 years. What is the market price per bond if the face value is $1,000?
What is the most important part of business plan in general : What is the most important part of a business plan in general? Considering the way you intend to use your business plan, what will be the most important part specific to your plan?

Reviews

Write a Review

Financial Management Questions & Answers

  Suppose the risk-free interest rate

Suppose the risk-free interest rate is 4% and the market portfolio has an expected return of 10% and a standard deviation of 16%. Johnson & Johnson Corporation stock has a beta of 0.32. What is its expected return?

  Scenario afree-cash-flow valuation of equitymake

scenario afree-cash-flow valuation of equitymake entries in blue-colored

  Calculate the return and risk of a two asset portfolio

Calculate the return and risk of a two asset portfolio. Asset 1 has an annualized expected real return of 5.5% and a weight of 35% in the portfolio. Asset 2 has an annualized expected real rate of return of 2.0% and a weight of 40% in the portfolio.

  Calculate and show the external funds that must be raised

Cash 320 Receivables 1600 Inventories 2400 Total Current Assets 4320 Fixed Assets 2400 Total Assets 6720 AP 240 NP 400 Accruals 200 Total Current Liabilities 840 Long Term Debt 1600. Using the AFN equation, calculate and show the external funds that ..

  Expected to result in after-tax cash flows

A company has an opportunity to invest in a project that is expected to result in after-tax cash flows of $18,000 the first year, $20,000 the second year, $23,000 the third year, -$8,000 the fourth year, $30,000 the fifth year, $36,000 the sixth year..

  Show your understanding of capital structure

Show your understanding of capital structure that you learnt in your corporate finance course in the MSc Finance and Investment programme at London School of Business and Finance.

  Cyclical type of business-reflected in dividend policy

Beaksley, Inc. is a very cyclical type of business which is reflected in its dividend policy. The firm pays a $2.00 a share dividend every other year with a payment being paid today. Five years from now, the company is repurchasing all of the outstan..

  Consultant for pristine urban-tech zither

You have been hired as a consultant for Pristine Urban-Tech Zither, Inc. (PUTZ), manufacturers of fine zithers. The market for zithers is growing quickly. The company bought some land three years ago for $1.42 million in anticipation of using it as a..

  Function of each of the three major financial statements

What is the function of each of the three major financial statements? What are the basic approaches to analyzing these statement and what would an analyst hope to discern from the statements?

  Cash flow statement disclosure

Cash Flow Statement Disclosure You have been hired as a staff accountant by a small company that recently completed an initial public offering (IPO) of its common stock. At its inception, the company had been ?nanced by Pegasus, an investment group. ..

  Focus on reducing external failure cost

Part 3 Next, you focus on reducing external failure cost. You analyze the cost of returned burgers and determine 70% of returns are due to wrong ingredients. Compute NPV for the new terminal with 40% tax rate and Barry's cost of capital = 10% Year 0 ..

  What is the firms current receivables balance

Milwaukee Surgical Supplies Inc. sells on terms of 3/10, net 30. That means customers that pay in ten days get a 3 percent discount on their purchases, while customers that do not take the discount must pay in 30 days. What is the firm’s average coll..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd