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(Leverage Analysis) You have developed the following income statement for your corporation. It represents the most recent years operations, which ended yesterday. ________________________________________________________ Sales $45,750,000
(Leverage Analysis) You have developed the following income statement for your corporation. It represents the most recent years operations, which ended yesterday. ________________________________________________________ Sales $45,750,000 Variable costs 22,800,000 Revenue before fixed costs 22,950,000 Fixed costs 9,200,000 EBIT $13,750,000 Interest expense 1,350,000 Earnings before taxes $12,400,000 Taxes at 50% 6,200,000 Net Income $6,200,000 _________________________________________________________ Your supervisor in the controllers office has just handed you a memorandum asking for written responses to the following questions: a. What is the firms break-even point in sales dollars? b. If sales should increase by 25%, by what percent would earnings before taxes (and net income) increase?
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