Question
Beachcomber Treasures has determined that its degree of operating leverage (DOL) is 3.6 and its degree of financial leverage (DFL) is 2.0. Beachcomber forecasts EBIT
Beachcomber Treasures has determined that its degree of operating leverage (DOL) is 3.6 and its degree of financial leverage (DFL) is 2.0. Beachcomber forecasts EBIT will be $375,000 next year and net income will be $150,000.
What is Beachcomber's degree of total leverage (DTL)? Round your answer to one decimal place.
If next year's sales are 5 percent lower than forecasted, what will be Beachcomber's actual (i) EBIT and (ii) net income? The firm has no preferred stock. Do not round intermediate calculations. Round your answers to the nearest dollar.
Actual EBIT: $
Actual net income: $
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started