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Sinclair Manufacturing and Boswell Brothers Inc. are both involved in the production of brick for the homebuilding industry. Their financial information is as follows: Boswell
Sinclair Manufacturing and Boswell Brothers Inc. are both involved in the production of brick for the homebuilding industry. Their financial information is as follows: Boswell Sinclair Capital Structure Debt 11% $1,620,000 1,080,000 $ 2,700,000 Common stock, $10 per share $2,700,000 Total 2,700,000 Common shares 270,000 108,000 Operating Plan : Sales (67,000 units at $20 each) Variable costs Fixed costs $1,340,000 1,072,000 1,340,000 670,000 317,000 0 $268,000 Earnings before interest and taxes (EBIT) 353,000 The variable costs for Sinclair are $16 per unit compared to $10 per unit for Boswell. The variable costs for Sinclair are $16 per unit compared to $10 per unit for Boswell a. If you combine Sinclair's capital structure with Boswell's operating plan, what is the degree of combined leverage? (Round your answer to 2 decimal places.) Degree of combined leverage b. If you combine Boswell's capital structure with Sinclair's operating plan, what is the degree of combined leverage? (Round your answer to the nearest whole number.) Degree of combined leverage c. In part b, if sales double, by what percentage will earnings per share (EPS) increase? (Round your answer to the nearest whole percent.) EPS will increase by %
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