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What percent would earnings before taxes increase

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Reference no: EM132765051

You have developed the following analytical income statement for the Hugo Boss Corporation. It represents the most recent year's operations, which ended yesterday.

Sales                    $ 50,439,375
Variable costs          (25,137,000)
Revenue before fixed costs $ 25,302,375
Fixed costs         (10,143,000)
EBIT                   $ 15,159,375
Interest expense   (1,488,375)
Earnings before taxes $ 13,671,000
Taxes at 50%            (6,835,500)
Net income               $ 6,835,500

Problem 1: What is the degree of financial leverage?

Problem 2: What is the firm's break-even point in sales dollars?

Problem 3: If sales should increase by 30 percent, by what percent would earnings before taxes (and net income) increase?

Reference no: EM132765051

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