What is McDurham degree of operating leverage

Assignment Help Financial Accounting

Reference no: EM132823955

Question - McDurham has sales of $400 million. Fixed operating costs are $95 million, and the variable cost ratio is 45 percent. McDurham has outstanding a $100 million, 11 percent bank loan and $130 million in 12 percent coupon-rate bonds. McDurham has outstanding 250,000 shares of preferred stock with a $7 dividend and 10 million shares of common stock. McDurham's tax rate is 35 percent.

Part A) What is McDurham's degree of operating leverage at a sales level of $400 million?

A) 1.96

B) 1.76

C) 1.56

D) 1.36

Part B) Following the previous Part A, what is McDurham's degree of financial leverage?

A) 1.81

B) 1.51

C) 1.31

D) 1.11

Part C) Following the previous two parts, forecast McDurham's EPS if sales drop to $380 million.

A) 5.83

B) 5.68

C) 5.51

D) 5.15

Reference no: EM132823955

Questions Cloud

Why relationships and family partnerships are essential : A research-based rationale* as to why relationships and family partnerships are essential to effective programs and practices within the early childhood field.

Prepare journal entries to record the November transactions : Natalie decides to operate Cookie Creations as a proprietorship. Prepare journal entries to record the November transactions

Which the first task in an accounting analysis is to : Which the first task in an accounting analysis is to? Recast the financial statements into a common format./ Determine what accounts may require adjusting.

Discuss how teachers can use longitudinal data : Research the assessment process for ELL students in your state. What is the process your district goes through to properly identify students for ESL program.

What is McDurham degree of operating leverage : Fixed operating costs are $95 million, and the variable cost ratio is 45 percent. What is McDurham degree of operating leverage

Which would be an objective of an accounting analysis : Which would be an objective of an accounting analysis? What is the first thing an analyst should consider when conducting an accounting analysis?

Discuss about the online quality assurance programs : Recommend at least two ways to foster motivation and authentic learning opportunities for students taking online courses in your current workplace or planned.

Which the iasb has created accounting standards that are : Consider the following information 'a company losing two ships during a storm'. This is an example of an? Which the IASB has created accounting standards

What is the total amount of self employed income : Question - If net profit is $100,000 and there is $10,000 for section 1231 gain. What is the total amount of self employed income

User Account

All Pages