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Merrymart Corporation has 2,000,000 common shares outstanding as of 2019. The forecasted sales level for 2019 is 100,000 units with a selling price of P100.

Merrymart Corporation has 2,000,000 common shares outstanding as of 2019. The forecasted sales level for 2019 is 100,000 units with a selling price of P100. The total variable and total fixed operating costs amounted to P5,000,000 and P1,000,000, respectively. The interest expense for the year is P300,000. Assume that the cost structure and level of debt remains constant and the tax rate is 30%. What is the Degree of Financial Leverage (DFL)?

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