Bulldogs Inc. has sales of P4,500,000, variable costs equal 75% of sales, and a fixed interest costs of P750,000. The current operating income of the firm is P1,050,000. What is the degree of combined leverage
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Bulldogs Inc. has sales of P4,500,000, variable costs equal 75% of sales, and a fixed interest costs of P750,000. The current operating income of the firm is P1,050,000. What is the degree of combined leverage?
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- Bulldogs Inc. has sales of P4,500,000, variable costs equal 75% of sales, and a fixed interest costs of P750,000. The current operating income of the firm is P1,050,000. What is the degree of combined leverage? a. 5.85 b. 3.75 c. 4.25 d. 4.05Maverick Technologies has sales of $3,000,000. The company’s fixed operating costs total $500,000 and its variable costs equal 60% of sales, so the company’s current operating income is $700,000. The company’s interest expense is $492,284. What is the company’s degree of financial leverage (DFL)?Maverick Technologies has sales of $3,000,000. The company’s fixed operating costs total $543,418 and its variable costs equal 60% of sales. The company’s interest expense is $500,000. What is the company’s degree of total leverage (DTL)?
- Services Company's sales are ₱600,000, its fixed expenses are ₱150,000, and its variable expenses are 60% of sales. The DEGREE OF OPERATING LEVERAGE of its current operations is ₱_______________.Maverick Technologies has sales of $ 3,000,000. The company's fixed operating costs total $548, 438 and its variable costs equal 60% of sales. The company's interest expense is $ 500,000. What is the company's degree of total leverage (DTL)? Answer to 2 decimal places.Peterson Manufacturing is evaluating two different operating structures which are described below. The firm has annual interest expense of $250, common shares outstanding of 1,000, and a tax rate of 40 percent. Fixed Cost Price per unit Variable cost per unit Operating Structure 1 $500 $1 $0.75 Operating Structure 2 $1200 $1 $0.70 1. For each operating structure, calculate x. EBIT and EPS at 10,000, 20,000, and 30,000 units. y. the degree of operating leverage (DOL) and degree of total leverage (DTL) using 20,000 units as a base sales level. z. the operating breakeven point in units. 2. Which operating structure has greater operating leverage and business risk? 3. If Peterson projects sales of 20,000 units, which operating structure is recommended?
- LPM Corporation sells its product for $10 each. Fixed operating costs equal $100,000, and variable operating costs are 75 percent of the selling price. The firm pays $37,500 in interest, and its marginal tax rate is 35 percent. (a) What are LPM’s operating breakeven point and financial breakeven point? (b) If LPM expects to sell 65,000 units, what are its degree of operating leverage (DOL), degree of financial leverage (DFL), and degree of total leverage (DTL)? The firm has no preferred stockA firm has fixed operating costs of R650,000, a sales price per unit of R20, and a variable cost per unit of R13. At a base sales level of 500,000 units, what is the firm's degree of operating leverage. (1)Callie Corporation’s products sell for $180 each. The variable cost of each product is $135, and fixed operating costs are $371,250. Callie pays $61,875 interest on its outstanding debt each year, and its marginal tax rate is 40 percent. If Callie expects to sell 11,000 units, what is its degree of operating leverage (DOL), its degree of financial leverage (DFL), and its degree of total leverage (DTL)? The firm has no preferred stock.
- Sam Holdings is planning to open a new wholesaling operation. The target operating profit margin is 25%. The unit contribution margin will be 40% of sales. Average annual sales are forecast to be $4,250,000. The firm's total asset is $8,750,000 with debt-asset ratio of 40%. The firm pays 12% interest on the debt and has 100,000 common stocks. The firm is subjected to corporate tax rate of 28%. d. What is the degree of combined/total leverage (DCL/DTL)?2). annually. Company’s annual sales are OMR (4) million, its tax rate is 30%, and its rate on equity (ROE) is 20% and tota asset (TA)was OMR (1500) thousand. Omani Company sold .product at OMR 5.50 per unit; its variable operating costs are OMR (2.5) per unit -:Answer the following .Calculate the firm’s degree of Operating leverage a) .Calculate the firm’s degree of financial leverage b) ?What is the combine effect of fixed Operating and Financial Costs c)The Omani Company has OMR (800) thousand of total debt (Liabilities) outstanding (Liabilities), and it pays an interest of OMR (80) thousandFirm R has sales of 100,000 units at $2 per unit, variable operating costs of $1.70 per unit, and fixed operating costs of $6,000. Interest is $10,000 per year. Firm W has sales of 100,000 units at $2.50 per unit, variable operating costs of $1.00 per unit, and fixed operating costs of $62,500. Interest is $17,500 per year. Assume that both firms are in the 40% tax bracket. Compute the degree of operating, financial and total leverage for firm R. Compute the degree of operating, financial and total leverage for firm W. Compare the relative risks of the two firms.
