a.
To calculate: The degree of operating leverage (DOL) of Harding Company.
Introduction:
Degree of operating leverage (DOL):
It is a multiple measurement ratio which determines the quantity of change in operating income of the company with the change in sales value.
b.
To calculate: The Degree of financial leverage (DFL) of Harding Company.
Introduction:
Degree of financial leverage (DFL):
DFL is a leverage ratio that evaluates the reaction of a company's EPS to the variations in its operating income, as a consequence of alterations in its capital structure.
c.
To calculate: The Degree of combined leverage (DCL) of Harding Company.
Introduction:
Degree of Combined Leverage (DOL):
It summarises the effect of the combination of both operating as well as financial leverages on a firm. It helps in determining the risk of any firm. A company with high DCL is considered more risky.
d.
To calculate: The break-even point (BEP) of Harding Company.
Introduction:
The Break-even point (BEP):
It is a point of sale at which a company is in a no
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