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 146,000 units at a price of $26 per unit; variable costs are $6 per unit, and fixed costs are $2,010,000. Interest expense is $421,000. What is the degree of combined leverage for this Japanese firm? (Round your answer to 2 decimal places.)

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 146,000 units at a price of $26 per unit; variable costs are $6 per unit, and fixed costs are $2,010,000. Interest expense is $421,000. What is the degree of combined leverage for this Japanese firm? (Round your answer to 2 decimal places.)

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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