S. Computing and interpreting the degree of operating leverage (DOL) It is December 31. Last year, Western Gas & Electric Company (WGEC) had sales of $8,000,000, and it forecasts that next year's sales will be $8,560,000. Its fixed costs have been and are expected to continue to be $600,000, and its variable cost ratio is 55.00%. WGEC's capital structure consists of a $13.5 million bank loan, on which it pays an interest rate of 6%, and 300,000 shares of common equity. The company's profits are taxed at a marginal rate of 35%. Given this data, complete the following sentences: The percentage change in the company's sales is The percentage change in EBIT is The degree of operating leverage (DOL) at $8,560,000 is There are several ways to use and interpret a firm's DOL value. Consider the following statement and indicate whether it accurately reflects the meaning or an appropriate use of a firm's DOL value. Assume that at a given sales level, a firm's DOL is 2.5. This means that a 1% change in the firm's sales will result in a corresponding 2.5% change in the firm's EBIT. True or False: This statement accurately describes a firm's DOL. O True O False Grade It Now Save & Continue Chapter 12 Assignment Attempts: Keep the Highest: /2 5. Computing and interpreting the degree of operating leverage (DOL) It is December 31. Last year, Western Gas & Electric Company (WGEC) had sales of $8,000,000, and it foreca $8,560,000. Its fixed costs have been and are expected to continue to be $600,000, and its variable cost ratio consists of a $13.5 million bank loan, on which it pays an interest rate of 6%, and 300,000 shares of common at a marginal rate of 35% Given this data, complete the following sentences: The percentage change in the company's sales is The percentage change in EBIT is 6.30% The degree of operating leverage (DOL) at $8,564 8.40% There are several ways to use and interpret a firm's 7.00% meaning or an appropriate use of a firm's DOL valud le. Consider the following statement and indicate whe Assume that at a given sales level, a firm's DOL is 2.5. This means that a 1% change in the firm's sales will re 2.5% change in the firm's EBIT. True or False: This statement accurately describes a firm's DOL True O False Grade It Now 00 000 Chapter 12 Assignment Attempts: Keep the Highest: /2 5. Computing and interpreting the degree of operating leverage (DOL) It is December 31. Last year, Western Gas & Electric Company (WGEC) had sales of $8,000,000, and it for $8,560,000. Its fixed costs have been and are expected to continue to be $600,000, and its variable cost ra consists of a $13.5 million bank loan, on which it pays an interest rate of 6%, and 300,000 shares of comm at a marginal rate of 35%. Given this data, complete the following sentences: The percentage change in the company's sales is The percentage change in EBIT is . The degree of operating leverage B,560,000 is 11.76% There are several ways to use and id 8.40% rm's DOL value. Consider the following statement and indicate meaning or an appropriate use of a value. 6.72% Assume that at a given sales level, a firm's DOL is 2.5. This means that a 1% change in the firm's sales wi 2.5% change in the firm's EBIT. True or False: This statement accurately describes a firm's DOL. O True O False Grade It N Chapter 12 Assignment Attempts: Keep the Highest: /2 5. Computing and interpreting the degree of operating leverage (DOL) It is December 31. Last year, Western Gas & Electric Company (WGEC) had sales of $8,000,000, and it forecasts $8,560,000. Its fixed costs have been and are expected to continue to be $600,000, and its variable cost ratio is 5 consists of a $13.5 million bank loan, on which it pays an interest rate of 6%, and 300,000 shares of common equi at a marginal rate of 35%. Given this data, complete the following sentences: The percentage change in the company's sales is The percentage change in EBIT is The degree of operating leverage (DOL) at $8,560,000 is There are several ways to use and interpret a firm's DOL val 0.83 meaning or an appropriate use of a firm's DOL value. 1.20 sider the following statement and indicate wheth 82.86 Assume that at a given sales level, a firm's DOL is 2.5. This means that a 1% change in the firm's sales will result 2.5% change in the firm's EBIT. True or False: This statement accurately describes a firm's DOL O True O False Grade it Now AID 80 000 F2 F3 F4 F5
