Consider a firm that has fixed costs of 6M. Its sales are 12M and the variable costs are one-third of sales. The firm uses both debt and equity and has an interest expense of 1M. There are no taxes. Which of the following statement is correct?

1. The companys operating leverage is 2.
2. The companys financial leverage is 4.
3. The companys operating leverage is 4.
4. None of the statements above is correct.