Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

no photos,dont use hand-writing,Thank u 6. Consider the following income statement. GOODING RETAIL, LTD. Year ended Dec 31, 2019 SALES Less: Variable Costs Contribution Less:

no photos,dont use hand-writing,Thank u
image text in transcribed
6. Consider the following income statement. GOODING RETAIL, LTD. Year ended Dec 31, 2019 SALES Less: Variable Costs Contribution Less: Fixed Costs Earnings before interest and taxes (EBIT) Less: Interest expense Earnings before taxes (EBT) Taxes @40% Earnings after taxes Number of common shares Earnings per share (EPS) $3,560,000 1,420,000 2,140,000 1,200,000 940,000 300,000 640,000 256,000 384,000 190,000 a) Given the above statement for Gooding Retail, calculate the earnings per share (EPS). (1 point) b) Given the above statement, calculate the degree of operating leverage (2 points) c) Given the above statement, calculate the degree of financial leverage. (2 points) d) Given the above statement, calculate the degree of combined or total leverage (1.5 points) e) Write a statement interpreting in words and using the appropriate percentages what the degree of operating leverage (DOL) arrived at in b) means. (2 points) 1) Find the percentage decrease in earnings per share if there is a 6% decrease in sales revenue. (1.5 points)

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

Corporate Finance Theory And Practice

Authors: Aswath Damodaran

2nd Edition

0471283320, 9780471283324

More Books

Students also viewed these Finance questions