FREE Trial
Answered step by step
Verified Expert Solution
Link Copied!
Question
1 Approved Answer

The following information relates to the operations and capital structure of Anding'o Company Ltd. Installed capacity 1200 units Actual production 800 units Selling price/unit Sh.15Variable

The following information relates to the operations and capital structure of Anding'o Company Ltd. Installed capacity 1200 units Actual production 800 units Selling price/unit Sh.15Variable cost/unit Sh.10Fixed cost Sh .Situation A 1000Situation B 2000Situation C 3000Capital Structure Financial Plan1 2 3Sh. Sh. Sh. Equity 15,000 17,500 12,500Debt 15,000 12,500 12,500Cost of debt (For all plans) 12%Tax rate 30%

REQUIRED:-Determine the degree of combined leverage of the financial plans above and give your advice to the managers of anding'o ltd.

Step by Step Solution

★★★★★

3.40 Rating (153 Votes )

There are 3 Steps involved in it

Step: 1

The degree of combined leverage DCL measures the sensitivity of earnings before interest and taxes EBIT to changes in sales It is calculated as the pe... 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_2

Step: 3

blur-text-image_3

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

Advanced Accounting
Advanced Accounting

Authors: Paul M. Fischer, William J. Tayler, Rita H. Cheng

11th edition

538480289, 978-0538480284

More Books

Students explore these related Finance questions

Question

The following information relates to three of Montreal's Top and Exclusive private training fitness studios in Downtown. Salim's Fitness, Kardiac and Golden gym For each Fitness Studio calculate the...

Answered: 3 weeks ago

Question

Old Office Building Karas Investments owns a small office building in Windhoek, from which the company operates. The Windhoek office was purchased on 1 March 2019. Karas Investments decided to move...

Answered: 3 weeks ago

Question

Question 2: What kind of path/steps should the researcher follow, who wants to demonstrate/support the view that "There is a relationship between the COVID-19 spread indicators (cases, number of...

Answered: 3 weeks ago

Question

What is Norway's global health issues and how can they be combated? explain

Answered: 3 weeks ago

Question

Find the area, if it exists, of the region under the graph of y f (x) and to the right of x 1. 1. 2. 3. 4. f(x) = ex? f(x) = Vr3

Answered: 3 weeks ago

Question

Elliot-Jones manufactures two large-screen television models. The 65-inch fl at-panel LED model has been in production since 2012 and sells for $900. The company introduced a 55-inch 4K ultra HD in...

Answered: 3 weeks ago

Question

6.68 Faculty Ages The influx of new ideas into a university, introduced primarily by new young faculty, is becoming a matter of concern because of the increasing ages of faculty members; that is, the...

Answered: 3 weeks ago

Question

Jacobs Overhead Doors reports the following financial information: Assets ............$ 45,800 Liabilities ............ 15,230 Common Stock ......... 28,700 Dividends ........... 7,000 Revenues...

Answered: 3 weeks ago

Question

I am have trouble understanding the relationship between block numbers to Sector, Track, or Cylinder Numbers

Answered: 3 weeks ago

Question

A new company is planning to make and sell new cheap smart phones in America. They will sell the phone at $99.99 in a market that potentially buys 1 million smart phones every year. They hope to get...

Answered: 3 weeks ago

Question

Hannah Ortega is considering expanding her business. She plans to hire a salesperson to cover trade shows. Because of compensation, travel expenses, and booth rental, fixed costs for a trade show are...

Answered: 3 weeks ago

Question

A die is rolled and value is recorded. The table shows the results of 20 rolls. 1 5 5 2 5 1 5 65 2 LQ 5 LO 5 2462 6 33 5 2 2 (a) Complete the probability distribution table. X P(X) 1

Answered: 3 weeks ago

Question

Uncle Cosmo plans to build a factory. It will cost $ 1 , 0 0 0 , 0 0 0 . He expects the after - tax cash inflows to be $ 2 3 0 , 0 0 0 annually for 6 years, after which he plans to scrap the...

Answered: 3 weeks ago

Question

The amount of pollutants that are found in waterways near large cities is normally distributed with mean 9 ppm and standard deviation 1.3 ppm. 38 randomly selected large cities are studied. Round all...

Answered: 3 weeks ago

Question

Your faculty member will divide the class into teams. Each team will select a specific organization they will be developing the security program for a hospital, college, government building, or...

Answered: 3 weeks ago

Question

2. You are working for a glider manufacturer and have been asked to analyse the laminar boundary layer at a certain point on the smooth wing. The velocity profile at this point, u(y), is given by: u...

Answered: 3 weeks ago

Question

kindly please show me the step by step computation for this question. thanks! Question 4: ACME manufacturing is considering replacing an existing production line with a new line that has a greater...

Answered: 3 weeks ago

Question

Tell whether the angles or sides are corresponding angles, corresponding sides, or neither. AC and JK

Answered: 3 weeks ago

Question

On January 1, 2011, Peanut Company acquired 80% of the common stock of Salt Company for $200,000. On this date, Salt had total owners equity of $200,000. During 2011 and 2012, Peanut appropriately...

Answered: 3 weeks ago

Question

Explain how both the intrinsic value and the time value are measured for a forward contract to sell and for a put option.

Answered: 3 weeks ago

Question

Edith Leppert and her husband, Gerald Leppert, have net assets with market values of $4,300,000 and $2,400,000, respectively. The Lepperts have begun to do some estate tax planning and are developing...

Answered: 3 weeks ago

Question

Here are the summary statistics for the weekly payroll of a small company: lowest salary = $300, mean salary = $700, median = $500, range = $1200, IQR = $600, first quartile = $350, standard...

Answered: 3 weeks ago

Question

Here is a timeplot of each monthly load factor for domestic flights for 2000 to 2013 along with a lowess smooth. a) Describe the patterns you see in this plot. b) Do you expect the overall pattern to...

Answered: 3 weeks ago

Question

The table lists the amount of rainfall (in acre-feet) from the 26 clouds seeded with silver iodide discussed in Exercise 40: a) Why is acre-feet a good way to measure the amount of precipitation...

Answered: 3 weeks ago

Previous Question Next Question