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15-24 (Leverage analysis) An analytical income statement for last year's operations follows. $18000000 7000000 $11000000 6000000...
15-10 (Lecverage analysti) You have developed the following analytical profit and loss satement fr your company....
15-10 (Lecverage analysti) You have developed the following analytical profit and loss satement fr your company. It represents the most recent year's operations, which ended yesterday. Sales Variable costs Revenue before fixed costs Fixed costs EBIT Interest expense Earnings before taxes Taxes (0.50) Net income $45750000 22800000 $22950000 9200000 13750000 1350000 $12400000 6200000 $6 200000 Your supervisor has just hand ed you a memo asking for written responses to the following questions (a) At this level of output, what is...
degree of operating leverage and financial leverage
reflects last year’s operations:Sales $18,000,000Variable costs 7,000,000Revenue before fixed costs $11,000,000Fixed costs 6,000,000EBIT $5,000,000Interest expense 1,750,000Earnings before taxes (EBT) $3,250,000Taxes 1,250,000Net income $2,000,000REQUIRED: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?
The Harding Company manufactures skates. The company's Income statement for 20x1 is as follows
The Harding Company manufactures skates. The company's Income statement for 20x1 is as follows: HARDING COMPANY Income Statement For the Year Ended December 31, 20x1 Sales (11,700 skates @ $84 each)$982,800Variable costs (11,700 skates at $37)432,900Fixed costs320,000Earnings before interest and taxes (EBIT)$229,900Interest expense68,500Earnings before taxes (EBT)$161,400Income tax expense (30%)48,420Earnings after taxes (EAT)$112,980a. Compute the degree of operating leverage. b. Compute the degree of financial leveragec. Compute the degree of combined leverage.d. Compute the break-even point in units (number of skates).
The Sterling Tire Company's income statement for 20X1 is as follows STERLING TIRE COMPANY For the...
The Sterling Tire Company's income statement for 20X1 is as follows STERLING TIRE COMPANY For the Year Ended Decenber 31, 28x1 Sales (21,800 tires at $62 each) $1,302,000Variable costs (21,038 tires at S31) 651,000Fixed costs 410,000Earnings before interest and taxes (EBIT) 241,000Interest expense 50,500Earnings before taxes (EBT) $190,500Income tax expense (20%) 38,100Earnings after taxes (EAT) ...
?(Leverage and? EPS) You have developed the following pro forma income statement for your? corporation: It...
?(Leverage and? EPS) You have developed the following pro forma income statement for your? corporation: It represents the most recent? year's operations, which ended yesterday. Your supervisor in the? controller's office has just handed you a memorandum asking for written responses to the following? questions: a. If sales should increase by 30 ?percent, by what percent would earnings before interest and taxes and net income? increase? b. If sales should decrease by 30 ?percent, by what percent would earnings before...
(Break-even analysis) You have developed the income statement Sales 51,100,865 Variable costs (24,569,000) Revenue before fixed...
(Break-even analysis) You have developed the income statement Sales 51,100,865 Variable costs (24,569,000) Revenue before fixed costs 26,531,865 Fixed costs (14,254,000) EBIT 12,277,865 Interest expense (1,054,688) Earnings before taxes 11,223,177 Taxes at 22% (2,469,099) Net income ˜NI for the Hugo Boss Corporation. It represents the most recent year's operations, which ended yesterday. Your supervisor in the controller's office has just handed you a memorandum asking for written responses to the following questions: a. What is the firm's break-even point in...
Income Statement for See Sales (35,000 tires at $90 each) 3,150,000 Variable costs (35,000 tires 45 1,575, ooo Fixe...
Income Statement for See Sales (35,000 tires at $90 each) 3,150,000 Variable costs (35,000 tires 45 1,575, ooo Fixed costs 550.000 Earnings before Interest and takes 1,025, oool (EBIT) Interest expense 37 Sou Earnings before taxes (EBT) 967, soo Income tax expense ( 30%) 290, aso Earnings after takes (EAT) 677,250 a) Compute degree of operating leverage, b) compute degree of financial leverage c) compute degree of combined leverage d) compute break-even point in units,
The Harding Company manufactures skates. The company’s income statement for 20X1 is as follows: HARDING COMPANY...
The Harding Company manufactures skates. The company’s income statement for 20X1 is as follows: HARDING COMPANY Income Statement For the Year Ended December 31, 20X1 Sales (12,500 skates @ $100 each) $ 1,250,000 Variable costs (12,500 skates at $45) 562,500 Fixed costs 400,000 Earnings before interest and taxes (EBIT) $ 287,500 Interest expense 72,500 Earnings before taxes (EBT) $ 215,000 Income tax expense (20%) 43,000 Earnings after taxes (EAT) $ 172,000 a. Compute the degree of operating leverage. (Round your...
#11 Variable operating costs 45,000 Gross profit Fixed operating costs 20,000) Net operating income25,000 Interest Earnings...
#11
Variable operating costs 45,000 Gross profit Fixed operating costs 20,000) Net operating income25,000 Interest Earnings before taxes 15,000) 10,000 4,000) 6,000 Taxes (40%) Net income Compute Surfside's degree of operating leverage (DOL), degree of financial leverage (DFL), and degree of total leverage (DTL). 12-11 Data Recovery Systems (DRS) has a degree of operating leverage (DOL) equal to 3.2x and a degree of total leverage (DTL) equal to 8x. DRS forecasts that this year's sales will be $300,000 and that...
Firm A Firm B units Price Variable Cost Fixed Costs Interest Expense Tax Rate 200.00 300.00...
Firm A Firm B units Price Variable Cost Fixed Costs Interest Expense Tax Rate 200.00 300.00 180.00 2,400.00 500.00 0.25 units Price Variable Cost Fixed Costs Interest Expense Tax Rate 2,000.00 8.00 4.50 2,400.00 500.00 0.25 Sales 200 units at 300 dollars Less Variable Costs (180 at 200 units) Fixed costs Earnings before interest and taxes (EBIT) Interest expense Earnings before taxes (EBT) Income tax expense Earnings after taxes (EAT) 60,000.00 36,000.00 2,400.00 21,600.00 500.00 21,100.00 5,275.00 15,825.00 Sales 2000...
15-10 (Lecverage analysti) You have developed the following analytical profit and loss satement fr your company. It represents the most recent year's operations, which ended yesterday. Sales Variable costs Revenue before fixed costs Fixed costs EBIT Interest expense Earnings before taxes Taxes (0.50) Net income $45750000 22800000 $22950000 9200000 13750000 1350000 $12400000 6200000 $6 200000 Your supervisor has just hand ed you a memo asking for written responses to the following questions (a) At this level of output, what is...
The Harding Company manufactures skates. The company's Income statement for 20x1 is as follows: HARDING COMPANY Income Statement For the Year Ended December 31, 20x1 Sales (11,700 skates @ $84 each)$982,800Variable costs (11,700 skates at $37)432,900Fixed costs320,000Earnings before interest and taxes (EBIT)$229,900Interest expense68,500Earnings before taxes (EBT)$161,400Income tax expense (30%)48,420Earnings after taxes (EAT)$112,980a. Compute the degree of operating leverage. b. Compute the degree of financial leveragec. Compute the degree of combined leverage.d. Compute the break-even point in units (number of skates).
The Sterling Tire Company's income statement for 20X1 is as follows STERLING TIRE COMPANY For the Year Ended Decenber 31, 28x1 Sales (21,800 tires at $62 each) $1,302,000Variable costs (21,038 tires at S31) 651,000Fixed costs 410,000Earnings before interest and taxes (EBIT) 241,000Interest expense 50,500Earnings before taxes (EBT) $190,500Income tax expense (20%) 38,100Earnings after taxes (EAT) ...
Income Statement for See Sales (35,000 tires at $90 each) 3,150,000 Variable costs (35,000 tires 45 1,575, ooo Fixed costs 550.000 Earnings before Interest and takes 1,025, oool (EBIT) Interest expense 37 Sou Earnings before taxes (EBT) 967, soo Income tax expense ( 30%) 290, aso Earnings after takes (EAT) 677,250 a) Compute degree of operating leverage, b) compute degree of financial leverage c) compute degree of combined leverage d) compute break-even point in units,
#11
Variable operating costs 45,000 Gross profit Fixed operating costs 20,000) Net operating income25,000 Interest Earnings before taxes 15,000) 10,000 4,000) 6,000 Taxes (40%) Net income Compute Surfside's degree of operating leverage (DOL), degree of financial leverage (DFL), and degree of total leverage (DTL). 12-11 Data Recovery Systems (DRS) has a degree of operating leverage (DOL) equal to 3.2x and a degree of total leverage (DTL) equal to 8x. DRS forecasts that this year's sales will be $300,000 and that...
Firm A Firm B units Price Variable Cost Fixed Costs Interest Expense Tax Rate 200.00 300.00 180.00 2,400.00 500.00 0.25 units Price Variable Cost Fixed Costs Interest Expense Tax Rate 2,000.00 8.00 4.50 2,400.00 500.00 0.25 Sales 200 units at 300 dollars Less Variable Costs (180 at 200 units) Fixed costs Earnings before interest and taxes (EBIT) Interest expense Earnings before taxes (EBT) Income tax expense Earnings after taxes (EAT) 60,000.00 36,000.00 2,400.00 21,600.00 500.00 21,100.00 5,275.00 15,825.00 Sales 2000...
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