The following is information for three local auto dealers: a. Using the information given in the above
Question:
The following is information for three local auto dealers:
a. Using the information given in the above table, construct income statements for each company and the industry average. Assume that each company faces a tax rate of 25%.
b. Calculate the break-even points and the degrees of operating, financial, and combined leverage for each company and the industry average.
c. Compare the companies to each other and the industry average. What conclusions can you draw about each operation?
Transcribed Image Text:
Average Selling Price Unit Sales Interest Expense Variable Costs (% of Sales) Fixed Costs Preferred Dividends Common Shares Bell's Domestics $40,000 1,512 816,750 60% 9,900,000 815,000 4,500,000 Junior's Used $30,875 1,832 1,089,000 45% 6,930,000 0 7,200,000 Europe's Best $59,460 872 3,267,000 40% 19,800,000 452,000 2,700,000 Industry Average $37,500 1,265 1,633,500 48% 10,890,000 315,000 6,300,000
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ANSWER a Income Statements Company A Amount Sales 650000 Cost of Goods Sold 390000 Gross Profit 260000 Operating Expenses 180000 Operating Income 8000...View the full answer
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