Question
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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