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As the Financial Controller for a manufacturing firm, you have constructed the following partial pro forma income statement for the next fiscal year: Required: a
As the Financial Controller for a manufacturing firm, you have constructed the following partial pro forma income statement for the next fiscal year: Required: a Calculate the breakeven point in units. Marks b Calculate the breakeven point in RM Marks c Assume that the management is considering revising the sales price downward to RM to increase the sales volume by Is the revised price a better alternative? Marks d Calculate the degree of operating leverage at this level of output. Marks e Calculate the degree of financial leverage. Marks f Determine the degree of combined leverage. Marks g If sales increase by what will be the new level of the company's EPS if it has shares outstanding? Marks h Define and briefly discuss the dangers to a firm of having high level of: i Operating leverage ii Financial leverage Marks
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