Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

ACME, Inc. reported the following income statement for 2022. Sales is 3,500,000 dollar Variable Costs is 1,000,000 dollar Fixed Operating Costs is 700,000 dollar EBIT

ACME, Inc. reported the following income statement for 2022. 

Sales is 3,500,000 dollar 

Variable Costs is 1,000,000 dollar 

Fixed Operating Costs is 700,000 dollar 

EBIT is 1,800,000 

Interest Expense is 200,000 dollar 

EBT is 1,600,000 dollar 

Taxes (%30) is 480,000 dollar 

Net Income is 1,120,000 dollar 

Earnings Per Share is 1,12 dollar


Calculate the operating leverage, financial leverage and total leverage. 

If Acmes's sales increase by %10, Acme's Ebit will increase by %?

Step by Step Solution

3.48 Rating (155 Votes )

There are 3 Steps involved in it

Step: 1

To calculate the operating leverage we need to determine the contribution margin ratio CMR which is ... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Contemporary Financial Management

Authors: R. Charles Moyer, James R. McGuigan, Ramesh P. Rao

14th edition

1337090581, 978-1337090582

More Books

Students also viewed these Finance questions

Question

e. What are the programs research and clinical focus areas?

Answered: 1 week ago