Firms in Japan often employ both high operating and financial leverage because of the use of modern technology and close borrower- lender relationships. Assume the Mitaka Company has a sales volume of 125,000 units at a price of $25 per unit; variable costs are $5 per unit and fixed costs are $1,800,000. Interest expense is $400,000. What is the DCL for this Japanese firm? (Round the final answer to 2 decimal places.) Degree of combined leverage X

Firms in Japan often employ both high operating and financial leverage because of the use of modern technology and close borrower- lender relationships. Assume the Mitaka Company has a sales volume of 125,000 units at a price of $25 per unit; variable costs are $5 per unit and fixed costs are $1,800,000. Interest expense is $400,000. What is the DCL for this Japanese firm? (Round the final answer to 2 decimal places.) Degree of combined leverage X

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter14: Capital Structure Management In Practice

Section: Chapter Questions

Problem 11P

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Firms in Japan often employ both high operating and financial leverage because of the use of modern technology and close borrower–lender relationships. Assume the Mitaka Company has a sales volume of 140,000 units at a price of $30 per unit; variable costs are $8 per unit, and fixed costs are $1,950,000. Interest expense is $415,000. What is the degree of combined leverage for this Japanese firm? (Round your answer to 2 decimal places.)
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