What is McDurham degree of operating leverage

Assignment Help Financial Accounting

Reference no: EM132846217

Question - Part A) 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. 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: EM132846217

Questions Cloud

Techno-economic assessment of local energy systems : Techno-economic Assessment of Local Energy Systems - Based on photovoltaic energy generation potential alone, choosea suitable location (longitude and latitude)

How social determinants of health for older adult are impact : Healthy aging is an important public health issue, Discuss how social determinants of health for the older adult are impacted for those living in poverty.

Calculate what is Avery WACC : The interest rate on new debt is 6.50%, the yield on the preferred is 6.00%, Calculate what is Avery WACC

Describe sandra feelings about dependency : Describe Sandra's feelings about dependency and loss of autonomy because she is unable to do her own activities of daily living any longer

What is McDurham degree of operating leverage : McDurham's tax rate is 35 percent. What is McDurham's degree of operating leverage at a sales level of $400 million

Explain signs and symptoms for pharmacological treatment : Explain signs and symptoms for your diagnosis, pharmacological treatments, nonpharmacological treatments, and appropriate community resources and referrals.

MITS5004 IT Security Assignment : MITS5004 IT Security Assignment Help and Solution, Victorian Institute of Technology - Assessment Writing Service - write a report or critique on the paper

Identify key stakeholders who will support the change : Identify the stakeholders who have some form of stake or interest in the project outcomes. Identify key stakeholders who will support the change.

Calculate the earnings before interest and taxes : Given - Total revenue is $827,500, Cost of goods sold is $611,800. From the data above calculate the earnings before interest and taxes (EBIT)

User Account

All Pages