What is itss degree of financial leverage at an ebit level

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Reference no: EM13335558

Illinois Tool Company (ITC) fixed operating costs are $1,260,000 and its variable cost ratio (i.e. variable costs as a fraction of sales) is 0.70. The firm has $3,000,000 in bonds outstanding at an interest rate of 8 percent. ITC has 30,000 shares of $5 preferred stock and 150,000 shares of common stock outstanding. ITS is in the 50 percent corporate income tax bracket. Forecasted sales for next year are $9 million. What is ITS's degree of financial leverage at an EBIT level of $1,440,000?

Reference no: EM13335558

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