For Occidental Petroleum, assume that all cost of goods sold and all the operating expenses except depreciation, depletion, and amortization are variable expenses. Assume that half the depreciation, amortization, and depletion expenses are fixed. Compute the following ratios for 2014:

A. Operating leverage effect B. Financial leverage effect C. Total leverage D. Capital structure leverage Questions A5 to A8 use Tables 4.14 and 4.15. These questions all deal with Occidental Petroleum, a major oil company. You will notice that Occidental Petroleum has discontinued some operations. The effect of these operations is shown on each year’s financial statements in a single line, so that you can do ratio analysis using data for the continuing operations.

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Table 4.14 Occidental Petroleum Consolidated Balance Sheets (USD $) In millions, unless otherwise specified CURRENT ASSETS Cash and cash equivalents Trade receivables, net of reserves Inventories Other current assets Total current assets INVESTMENTS IN UNCONSOLIDATED ENTITIES PROPERTY, PLANT AND EQUIPMENT Oil and gas segment Dec. 31, Dec. 31, 2013 2012 $3,393 $1,592 5,674 4,916 1,200 1,344 1,056 1,640 11,323 9,492 1,459 1,894 72,367 65,417