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The following table is extracted from the income statement of Al shams Private Ltd. The company is having 10,000 common stocks, long term debt interest
The following table is extracted from the income statement of Al shams Private Ltd. The company is having 10,000 common stocks, long term debt interest is OMR 1,500 and Preferred stock dividend is OMR 3400. Answer the following question after analyzing the given table YEAR 1 YEAR 2 Earnings before interest and taxes (EBIT) 16.000 44,000 Less: Interest 5,000 ? Net profit before tax 11.000 ? Less: Tax(0.40) 4.400 ? Net profit after tax 6,600 ? Less: Preferred stock dividend 3.400 ? Earnings available for common shareholders 3,200 ? Earings Per Share(EPS) 0.32 ? a. Complete the table for the year 2 b. Calculate the Degree of Financial Leverage (DFL). c. Interpret your answer (DFL)
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