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QUESTION IV A. If the operating leverage for XYZ Inc is 4, and the company's sales volume decreases from 100,000 units to 95,000 units, explain
QUESTION IV A. If the operating leverage for XYZ Inc is 4, and the company's sales volume decreases from 100,000 units to 95,000 units, explain the impact on the income statement of this decrease in sales volume. Include a numeric (percentage) and a brief (four to ten words) written answer. B. Calculate the financial leverage, for XYZ Inc using the income statement data below. Interpret your answer with one or two short sentences. XYZ Inc INCOME STATEMENT For the year-ended December 31 2019 Sales Revenue $ 1,000,000 COGS 400,000 Gross Profit 600,000 Operating Expenses 380,000 EBIT 220,000 Interest Expense 170,000 EBT Earnings Before Tax 50,000 Income Tax Expense 40,000 EAT Earnings After Tax 10,000
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