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The Sterling Tire Companys income statement for 2013 is as follows: STERLING TIRE COMPANY Income Statement For the Year Ended December 31, 2013 Sales (33,000

The Sterling Tire Companys income statement for 2013 is as follows:
STERLING TIRE COMPANY
Income Statement
For the Year Ended December 31, 2013
Sales (33,000 tires at $86 each) $ 2,838,000
Variable costs (33,000 tires at $43) 1,419,000
Fixed costs 530,000
Earnings before interest and taxes (EBIT) $ 889,000
Interest expense 56,500
Earnings before taxes (EBT) $ 832,500
Income tax expense (20%) 166,500
Earnings after taxes (EAT) $ 666,000
Given this income statement, compute the following:
a.

Compute the degree of operating leverage. (Round your answer to 2 decimal places.)

Degree of operating leverage

b. Compute the degree of financial leverage. (Round your answer to 2 decimal places.)

Degree of financial leverage

c.

Compute the degree of combined leverage. (Round your answer to 2 decimal places.)

Degree of combined leverage

d.

Compute the break-even point in units. (Round your answer to the nearest whole number.)

Break-even point units

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