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The Sterling Tire Company's income statement for 2018 is below: STERLING TIRE COMPANY Income Statement Year ended December 31, 2018 $ $ 53 each 38
The Sterling Tire Company's income statement for 2018 is below: STERLING TIRE COMPANY Income Statement Year ended December 31, 2018 $ $ 53 each 38 each Sales 35,000 tires @ Less: Variable costs 35,000 tires @ Contribution Margin Less: Fixed cost Earnings before interest and taxes (EBIT) Interest expense Earnings before taxes (EBT) Income tax expense (30%) Earnings after taxes (EAT) $1,855,000 1.330.000 525.000 250.000 275.000 50.000 225,000 67,500 $157.500 Given this income statement, compute the following to two decimal places. a) Degree of operating leverage. b) Degree of financial leverage. c) Degree of combined leverage. d) Does financial or operating leverage have the greater impact
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