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The Omani Company has OMR (800) thousand of total debt ( Liabilities ) outstanding (Liabilities), and it pays an interest of OMR (80) thousand annually.
The Omani Company has OMR (800) thousand of total debt (Liabilities) outstanding (Liabilities), and it pays an interest of OMR (80) thousand annually. Companys annual sales are OMR (4) million, its tax rate is 20%, and its rate on equity (ROE) is 20% and tota asset (TA)was OMR (1500) thousand. Omani Company sold product at OMR (6) per unit; its variable operating costs are OMR (2) per unit.
Answer the following:-
- Calculate the firms degree of Operating leverage.
- Calculate the firms degree of financial leverage.
- What is the combine effect of fixed Operating and Financial Costs?
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