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The following table represents forecasted sales information for Iniesta Inc. Forecasted Operations Sales with 20.00% Increase Unit Change Sales in units (millions) 100.00 120.00 20.00

The following table represents forecasted sales information for Iniesta Inc.

Forecasted Operations

Sales with 20.00% Increase

Unit Change

Sales in units (millions) 100.00 120.00 20.00
Sales revenues $1,750.00 $2,100.00 $350.00
Variable cost of goods sold (500.00) (600.00) (100.00)
Gross profit $1,250.00 $1,500.00 $250.00
Fixed operating costs (200.00) (200.00) (0.00)
Net operating income $1,050.00 $1,300.00 $250.00

By how much will net operating income increase for the given increase in sales and associated expenses? (Round your answer to the nearest whole percent.) ______________%

Using the percent change in net operating income computed in the previous section, calculate the degree of operating leverage for the projected change of 20.00% from the original forecast. ________________x

Assuming an identical cost structure, compared to a company with a degree of operating leverage 1.08, how risky is Iniesta Inc.? ________________ (more/equal/less risk)

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