Given the following information for Computech, compute the firm’s degree of combined leverage (dollars are in thousands except EPS). Round your answer to one decimal place. Year 1 Year 2 Sales $550,000 $621,500 Fixed costs 110,000 110,000 Variable costs 200,000 226,000 Earnings before interest and taxes $240,000 $285,500 Interest 25,000 25,000 Earnings per share (EPS) $4.30 $5.21

Given the following information for Computech, compute the firm’s degree of combined leverage (dollars are in thousands except EPS). Round your answer to one decimal place. Year 1 Year 2 Sales $550,000 $621,500 Fixed costs 110,000 110,000 Variable costs 200,000 226,000 Earnings before interest and taxes $240,000 $285,500 Interest 25,000 25,000 Earnings per share (EPS) $4.30 $5.21

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter14: Capital Structure Management In Practice

Section: Chapter Questions

Problem 6P

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Macon Mills is a division of Bolin Products. Inc. During the most recent year, Macon had a net income of $40 million. Included in the income was interest expense of $2,800,000. The companys tax rate was 40%. Total assets were $470 million, current liabilities were $104,000,000, and $72,000,000 of the current liabilities are noninterest bearing. What are the invested capital and ROI for Macon?
If a firm has a contribution margin of $78M90 and a net income of $13,700 for the current month, what is their degree of operating leverage? 0.21 1.21 2.4 5.7
Financial leverage MicrosoCortrepotied (MSFT) reported the following data (in millions) for a tern year Compute the profit margin, asset turnover, and financial leverage metrics using the expandedDuPont formula. Round profit margin, asset turnover, and financial leverage to two decimalplaces.Round return on stockholders’ equity to one decimal place.
Income statements for two different companies in the same industry are as follows: Required: 1. Compute the degree of operating leverage for each company. 2. Compute the break-even point for each company. Explain why the break-even point for Quintex, Inc., is higher. 3. Suppose that both companies experience a 50 percent increase in revenues. Compute the percentage change in profits for each company. Explain why the percentage increase in Quintexs profits is so much greater than that of Trimax.
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. 4.05
XYZ company expects in the coming year: sales of 40000 units at $10 per unit, variable operating costs of $4 per unit, fixed operating costs of $30000, interest of $50000, and preferred stock dividends of $24000. The Company is in the 40% tax bracket. a. Compute the following and explain their meaning: 1- Degree of Operating Leverage (DOL). 2- Degree of Financial Leverage (DFL). 3- Degree of Total Leverage (DTL). b. If XYZ company’s Earnings Per Share (EPS) is currently $7.2, estimate its EPS in case of a 10% increase in earnings before interest and tax (EBIT).
If financial leverage of a firm is 4, Interest 6,00,000, Operating Leverage is 3, Variable cost to sales is 66.66%, Income tax rate is 30%, Number of Equity Shares 1, 00, 000. Calculate fixed cost and EPS of the firms. (For your reference, OL = Contribution/EBIT; FL = EBIT/EBT and CL = OL*FL)
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?
Compute the degree of financial leverage for a firm with EBIT of P6,000,000, fixed costs of P3,000,000, interest expense of P1,000,000, preferred stock dividends of P800,000 and a 40% tax rate. a. 1.2 b. 1.11 c. 1.43 d. 1.64
Calculating the degrees of leverage Acme Inc. forecasts the following income statement for the next year: Income Statement For the Year Ended on December 31 Net sales $960,000 Less: Variable costs 532,000 Less: Fixed costs 123,000 EBIT, or NOI $305,000 Less: Interest 196,000 EBT $109,000 Less: Taxes 43,600 Net income $65,400 Acme Inc. uses no preferred stock in its capital structure. Calculate the degrees of operating, financial, and total leverage for Acme Inc. and select your answers in the following table. DOL 1.40 or 1.64 or 1.72 or 1.81 DFL 1.88 or 2.02 or 2.18 or 2.80 DTL 3.40 or 3.48 or 3.57 or 3.93
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) thousand
calculate the degree of financial leverage for a firm with EBIT of $6,000,000, fixed cost of $3,000,000 interest expense of $1000000 preferred stock dividends of 800000 and a 40% tax rate

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bartleby, a Learneo, Inc. business

	Year 1	Year 2
Sales	$550,000	$621,500
Fixed costs	110,000	110,000
Variable costs	200,000	226,000
Earnings before interest and taxes	$240,000	$285,500
Interest	25,000	25,000
Earnings per share (EPS)	$4.30	$5.21