Sinclair Manufacturing and Boswell Brothers Inc. are both involved in the production of brick for the homebuilding industry. Their financial information is as follows:

If you combine Sinclairs capital structure with Boswells operating plan, what is the degree of combined leverage?

Degree of combined leverage: ___?___

Capital Structure
	Sinclair		Boswell
Debt @ 10%	$	660,000		0
Common stock, $10 per share		440,000	$	1,100,000
Total	$	1,100,000	$	1,100,000
Common shares		44,000		110,000
Operating Plan
Sales (51,000 units at $15 each)	$	765,000	$	765,000
Less: Variable costs		612,000		306,000
	($	12 per unit)	($	6 per unit)
Fixed costs		0		301,000
Earnings before interest and taxes (EBIT)	$	153,000	$	158,000