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a.
b.
Since Operating leverage and financial leverage is higher in case of Firm B than firm A therefore Firm B is more riskier than Firm A.
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Firm A Firm B units Price Variable Cost Fixed Costs Interest Expense Tax Rate 200.00 300.00...
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 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) ...
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 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...
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?
CHAPTER FIVE HOMEWORK 6 Saved 2 The Harding Company manufactures skates. The company's income statement for...
CHAPTER FIVE HOMEWORK 6 Saved 2 The Harding Company manufactures skates. The company's income statement for 20X1 is as follows 1.66 points HARDING COMPANY Income Statement For the Year Ended December 31, 20x1 Sales (10,500 skates $60 each) Variable costs (10,500 skates at $25) Pixed costs Earnings before interest and taxes (EBIT) Interest expense Earnings before taxes (EBT) Income tax expense (30) Earnings after taxes (EAT) $ 630,000 262,500 200,000 167,500 62,500 105, 000 31,500 eBook Ce $ 73,500 Hint...
Sales (100,000 units) Variable costs Contribution margin Fixed manufacturing costs Operating income Interest Earnings before taxes...
Sales (100,000 units) Variable costs Contribution margin Fixed manufacturing costs Operating income Interest Earnings before taxes Taxes (30°) Net Income $1.000.000 300.000 700,000 200,000 500.000 75.000 425.000 127,500 $297,500 Refer to the table. The degree of operating leverage S Select one: O a. 1.56x Ob.3.33% O c. 2.22% O d. 1.40x Sales (1,000 units) Variable costs Contribution margin Fixed manufacturing costs Operating income Interest Earnings before taxes Taxes (30°) Net Income Shares Outstanding $200,000 110,000 90,000 40.000 50.000 10,000 40,000...
ment# (Chapters 14,5) i Saved 0 Income Statement Year ended December 31, 20XX Sales (30,000 tires...
ment# (Chapters 14,5) i Saved 0 Income Statement Year ended December 31, 20XX Sales (30,000 tires at $45 each) Less: Variable costs (30,000 tires at $20) $ 1,350,000 600,000 Contribution margin Less: Fixed costs 750,000 600,000 oped Earnings before interest and taxes (EBIT) Interest expense 150,000 75,000 Tint Earnings before taxes (EBT) Income tax expense (30%) 75,000 22,500 rences $ 52,500 Earnings after taxes (EAT) Given this income statement, compute the following a. Degree of operating leverage (Round the final...
ssignment #1 (Chapters 14,5) * Saved 40 Income Statement Year ended December 31, 20xx Sales (30,000...
ssignment #1 (Chapters 14,5) * Saved 40 Income Statement Year ended December 31, 20xx Sales (30,000 tires at $45 each) Less: Variable costs (30,000 tires at $20) $ 1,350,000 600,000 Contribution margin Less: Fixed costs 750,000 600,000 pints Skipped Earnings before interest and taxes (EBIT) Interest expense 150,000 75,000 Point Earnings before taxes (EBT) Income tax expense (30%) 75,000 22,500 References 52,500 Earnings after taxes (EAT) Given this income statement compute the following: a. Degree of operating leverage (Round the...
#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...
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 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) ...
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).
CHAPTER FIVE HOMEWORK 6 Saved 2 The Harding Company manufactures skates. The company's income statement for 20X1 is as follows 1.66 points HARDING COMPANY Income Statement For the Year Ended December 31, 20x1 Sales (10,500 skates $60 each) Variable costs (10,500 skates at $25) Pixed costs Earnings before interest and taxes (EBIT) Interest expense Earnings before taxes (EBT) Income tax expense (30) Earnings after taxes (EAT) $ 630,000 262,500 200,000 167,500 62,500 105, 000 31,500 eBook Ce $ 73,500 Hint...
Sales (100,000 units) Variable costs Contribution margin Fixed manufacturing costs Operating income Interest Earnings before taxes Taxes (30°) Net Income $1.000.000 300.000 700,000 200,000 500.000 75.000 425.000 127,500 $297,500 Refer to the table. The degree of operating leverage S Select one: O a. 1.56x Ob.3.33% O c. 2.22% O d. 1.40x Sales (1,000 units) Variable costs Contribution margin Fixed manufacturing costs Operating income Interest Earnings before taxes Taxes (30°) Net Income Shares Outstanding $200,000 110,000 90,000 40.000 50.000 10,000 40,000...
ment# (Chapters 14,5) i Saved 0 Income Statement Year ended December 31, 20XX Sales (30,000 tires at $45 each) Less: Variable costs (30,000 tires at $20) $ 1,350,000 600,000 Contribution margin Less: Fixed costs 750,000 600,000 oped Earnings before interest and taxes (EBIT) Interest expense 150,000 75,000 Tint Earnings before taxes (EBT) Income tax expense (30%) 75,000 22,500 rences $ 52,500 Earnings after taxes (EAT) Given this income statement, compute the following a. Degree of operating leverage (Round the final...
ssignment #1 (Chapters 14,5) * Saved 40 Income Statement Year ended December 31, 20xx Sales (30,000 tires at $45 each) Less: Variable costs (30,000 tires at $20) $ 1,350,000 600,000 Contribution margin Less: Fixed costs 750,000 600,000 pints Skipped Earnings before interest and taxes (EBIT) Interest expense 150,000 75,000 Point Earnings before taxes (EBT) Income tax expense (30%) 75,000 22,500 References 52,500 Earnings after taxes (EAT) Given this income statement compute the following: a. Degree of operating leverage (Round the...
#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...
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