Tangerine Berhad had developed the following Income Statement for its operations ended 31 December 2022. Sales...
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Tangerine Berhad had developed the following Income Statement for its operations ended 31 December 2022. Sales (-) Variable Cost Contribution Margin (-) Fixed Costs Earnings Before Interest and Taxes (EBIT) Interest Expense Earnings Before Tax Taxes @ 24% Net Income RM'000 340,000 136,000 204,000 60,000 144,000 26,200 117,800 28,272 89,528 Required: a) Calculate the degree of operating leverage. b) Calculate the degree of financial leverage. c) Calculate the degree of combined leverage. d) If sales should increase by 8%, by what percent would EBIT increase? e) If EBIT should increase by 25%, by what percent would Net Income increase Tangerine Berhad had developed the following Income Statement for its operations ended 31 December 2022. Sales (-) Variable Cost Contribution Margin (-) Fixed Costs Earnings Before Interest and Taxes (EBIT) Interest Expense Earnings Before Tax Taxes @ 24% Net Income RM'000 340,000 136,000 204,000 60,000 144,000 26,200 117,800 28,272 89,528 Required: a) Calculate the degree of operating leverage. b) Calculate the degree of financial leverage. c) Calculate the degree of combined leverage. d) If sales should increase by 8%, by what percent would EBIT increase? e) If EBIT should increase by 25%, by what percent would Net Income increase
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SOLUTION a The degree of operating leverage DOL measures the sensitivity of EBIT to changes in sales ... View the full answer
Related Book For
Advanced Financial Accounting
ISBN: 978-0137030385
6th edition
Authors: Thomas Beechy, Umashanker Trivedi, Kenneth MacAulay
Posted Date:
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