Question
INFORMATION A Salmon fresh corporation is a successful medium size seafood restaurant. Its current capital structure is made up of $350,000 of 20% (annual interest)
INFORMATION A Salmon fresh corporation is a successful medium size seafood restaurant. Its current capital structure is made up of $350,000 of 20% (annual interest) Debt, and 10,000 shares of common stock. The firm pays taxes at the rate of 30%. The companys EBIT for the current year is $100,000 and shift upwards to $150,000 INFORMATION B Abdul Inc and Malik Inc have both produced similar products. Both companies sell their product (decorated vase) AT $9 per unit. Abdul inc has a fixed operating cost of $250,000 variable cost of $3.50 per unit. Malik Inc on the other hand has a fixed operating cost of $150,000 and variable cost of $4 per unit. Both firms are currently able to sell 40,000 units.
1. Using Information A: What is salmon Freshs EPS when EBIT is $100,000 and $120,000 Respectively?
2. Using information A: What is the Degree of Financial Leverage of the Company?
3. Using Information B: What is the Quantity Break Even (BEQ) for Abdul Inc and Malick Inc respectively?
4. Using Information B: How much is the BreakEven in Sales For Abdul Inc. and Malick Inc respectively
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