19. Glynn Enterprises and Monroe, Inc., both produce fluid control products. Their financial information is as follows:

a. If you combine Glynn’s capital structure with Monroe’s operating plan, what is the degree of combined leverage?

b. If you combine Monroe’s capital structure with Glynn’s operating plan, what is the degree of combined leverage?

c. Explain why you got the results you did in parts a and b.

d. In part

b, if sales double, by what percent will EPS increase?

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Debt @ 10% Capital Structure Glynn Monroe $1,500,000 Common stock, $10 per share 500,000 $2,000,000 $2,000,000 $2,000,000 Common shares 50,000 200,000 Operating Plan Sales (200,000 units at $5 each) $1,000,000 $1,000,000 Less: Variable costs... 600,000 200,000 ($3 per unit) Fixed costs. Earnings before interest and taxes (EBIT) 0 $ 400,000 ($1 per unit) 400,000 $ 400,000