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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 (45,000

The Sterling Tire Companys income statement for 2013 is as follows:

STERLING TIRE COMPANY
Income Statement
For the Year Ended December 31, 2013
Sales (45,000 tires at $110 each) $ 4,950,000
Variable costs (45,000 tires at $55) 2,475,000
Fixed costs 650,000
Earnings before interest and taxes (EBIT) $ 1,825,000
Interest expense 62,500
Earnings before taxes (EBT) $ 1,762,500
Income tax expense (20%) 352,500
Earnings after taxes (EAT) $ 1,410,000

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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