(-5%, -6%, -4.5%)

(-13.46%, -18.84%, -10.77%)

(2.69, 0.37, 7.95)

1. Computing and interpreting the degree of operating leverage (DOL) It is December 31. Last year, Carter Chemical Co. had sales of $8,000,000, and it forecasts that next year's sales will be $7,600,000. Its fixed costs have been and are expected to continue to be $4,400,000, and its variable cost ratio is 12.50%. Carter's capital structure consists of a $13.5 million bank loan, on which it pays an interest rate of 9%, and 250,000 shares of common equity. The company's profits are taxin at a mare 40% Given this data, complete the following sentences: - The percentage change in the company's sales is - The percentage change in Carter's EBIT is - The degree of operating leverage (DOL) at $8,000,000 is There are several ways to use and interpret a firm's DOL value. Consider the following statement and indicate whether it accurately reflects the meaning or an appropriate use of a firm's DOL value. Activities that change the distribution of a firm's fixed and variable cost structures, such as outsourcing, will affect a firm's DOL. True or False: This statement accurately describes a firm's DOL. False True