Question
Ensured Insurance has a degree of financial leverage (DFL) equal to 4.0 and a degree of total leverage (DTL) equal to 10.0. Ensured expects sales
Ensured Insurance has a degree of financial leverage (DFL) equal to 4.0 and a degree of total leverage (DTL) equal to 10.0. Ensured expects sales to be $600,000 this year, and its net profit margin is 8 percent. (a) What is Ensured's degree of operating leverage (DOL)? (b) If Ensured's sales turn out to be 7 percent higher than expected, what will its net income be?
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
Practical Financial Management
Authors: William R. Lasher
6th Edition
1439080496, 978-1439080498
