Use the following information to compute the firms degree of operating leverage (DOL), DFL, and degree of
Question:
Use the following information to compute the firm’s degree of operating leverage (DOL), DFL, and degree of total leverage (DTL):
Sales........................................................... $ 50,000
Variable operating costs.......................... ( 30,000)
Gross profit............................................... $ 20,000
Fixed operating costs............................... ( 15,000)
Net operating income (EBIT)........................ 5,000
Interest expense......................................... ( 3,000)
Earnings before taxes (taxable income)...$ 2,000
Taxes (35%)..................................................... ( 700)
Net income..................................................... 1,300
Step by Step Answer:
Essentials of Managerial Finance
ISBN: 978-0324422702
14th edition
Authors: Scott Besley, Eugene F. Brigham