HotDog Shirts, Inc. has a degree of operating leverage of 1.9. It also has a degree...
HotDog Shirts, Inc. has a degree of operating leverage of 1.9. It also has a degree of financial leverage of 2.6. What is the firm’s degree of combined or total leverage if the firm is in the 30% tax bracket
Homework Answers
Degree of total leveage = degree of operating leverage × degree of financial leverage
= 1.9 ×2.6 = 4.94
Tax is not accounted in as they are not accounted in both DOL and DFL.
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