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2. Lucia Ltd is a musical instrument manufacturer. The table provides you with information about the company. All amounts are in millions of Euros unless
2. Lucia Ltd is a musical instrument manufacturer. The table provides you with information about the company. All amounts are in millions of Euros unless stated otherwise Sales (4 million units at Euro 200 per unit) Variable costs (4 million units at Euro 50 per unit) Fixed costs Earnings before interest and tax (EBIT) Interest Earnings before tax (EBT) Tax (209) Earnings after tax (EAT) Euro (million) 800 (200) (80) 520 (70) 450 (90) 360 The company has 5,000,000 shares outstanding a. Calculate the degree of operating leverage of Lucia Ltd. b. Based on your answer, if the sales volume of Lucia Ltd increases by 10%, what would be the impact on the company's operating income (EBIT)? C. Calculate the degree of financial leverage of Lucia Ltd. d. Based on your answer, if Lucia's EBIT increased by 20%, what would happen to its Earnings Per Share (EPS)
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