What is the degree of combined leverage

Reference no: EM13305368

Reflects last year's operations:

Sales $18,000,000
Variable costs 7,000,000
Revenue before fixed costs $11,000,000
Fixed costs 6,000,000
EBIT $5,000,000
Interest expense 1,750,000
Earnings before taxes (EBT) $3,250,000
Taxes 1,250,000
Net income $2,000,000

REQUIRED:
1. At this level of output, what is the degree of operating leverage?
2. What is the degree of financial leverage?
3. What is the degree of combined leverage?
4. If sales increase by 15%, by what percent would EBT (and net income) increase?
5. What is your firm's break-even point in sales dollars?

Reference no: EM13305368

Questions Cloud

Prepare a two-page outline of a new venture business plan : Prepare a two-page outline of a new venture business plan, including all the components and sections. Using the guidelines in the text, also prepare a tag line and executive summary for an idea you have on additional pages-total pages not to e..

What assumptions or approximations are necessary to treat : Develop a model that determines your round trip gasoline costs. What assumptions or approximations are necessary to treat this model as a deterministic model? Are these assumptions or approximations acceptable to you?

What are the five categories of motivational needs : 1.What are the five categories of motivational needs described by Maslow? Give a detailed example of how each can be satisfied.

What is the equivalent resistance of the resistors : Two resistors of 7.0kohms and 10.0kohms are connected in series. A 4.0kohm resistor and a 9.0kohm resistor are connected in series to each other, What is the equivalent resistance of the resistors

What is the degree of combined leverage : If sales increase by 15%, by what percent would EBT (and net income) increase?

What is the wavelength of the wave pulse : A wave pulse travels down a slinky. The mass of the slinky is m = 0.93 kg and is initially stretched to a length L = 6.8 m. What is the wavelength of the wave pulse

What is the cost of the rebate : If the change in sales is the only consequence of this decision, what is the cost of the rebate (in millions of dollars)?

What is the expected forward exchange rate : Short term rates are 2% in Japan and 4% in the United States. The current exchange rate is 120 yen per dollar. What is the expected forward exchange rate ?

Find the percent error associated with these two values : The speed of an object is known to be 3.0 X 108m/s. You measure the velocity of the object during an experiment, find the percent error associated with these two values

User Account

All Pages