3. Use the information below to calculate the firms' degree of operating leverage, degree of financial leverage and the degree of combined leverage. What can you say about which firm would do best if they have high volatility in sales? Firm A Sales (units) 2000 Sales revenue $200,000 less: Variable at $50/unit $100,000 less: Fixed Costs $50,000 Operating Profit $50,000 less: Fixed Interest Chg. $25,000 Income Before Taxes $25,000 less: Taxes at 35% $8,750 Net Income After Taxes $16,250 Firm B 3000 $300,000 $150,000 $50,000 $100,000 $25,000 $75,000 $26,250 $48,750