Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

i need the answers plz Q-2: You are given a task of evaluating Siraj LLC's leverage position. Siraj company's relevant facts and figures have been

image text in transcribed
image text in transcribed i need the answers plz
Q-2: You are given a task of evaluating Siraj LLC's leverage position. Siraj company's relevant facts and figures have been made available for a 12-month period ending 30th September 2020 Sales = AED 880,000; Total Variable Cost = AED 480,000; Interest Expenses = AED 38,400; Fixed cost = AED 192,000; Operating Profit = AED 208,000; Tax rate = 30% Calculate Siraj company's degree of financial leverage, degree of operating leverage, and degree of combined leverage. 16 Marks) III P III B FT 5 Q-4: Hala Fashion LLC is a well-known fashion brand and manufactures quite a large range of products. The company is considering expanding into the GCC fashion market. It is estimated that although selling these wide ranges of products in the GCC market will generate additional annual sales of AED27 million, a high 10% of those accounts will be uncollectible. The cost of sales is estimated to be 70% of sales. The company is into 45% tax bracket a) Calculate Hala's incremental net income. (3 Marks) b) If Hala's receivables turnover ratio is 5, how much will be Hala's incremental accounts receivable investment and after-tax return on that investment? (2 Marks) c) Hala's top management requires a minimum return on investment (ROI) of 25%, should Hala expand into the GCC market? Why or why not? (1 Mark) d) Given this additional sale, Hala estimates that the ordering cost will be AED 16 and the carrying cost will be AED 6 per unit. Calculate economic order quantity (EOQ) for the company. (2 Marks)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

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

Step: 3

blur-text-image

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

Options Futures And Other Derivatives

Authors: John C. Hull

4th Edition

0130224448, 9780130224446

More Books

Students also viewed these Finance questions