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The Sterling Tire Company's income statement for 20X1 is as follows: STERLING TIRE COMPANY Income Statement For the Year Ended December 31, 20x1 Sales (31,000
The Sterling Tire Company's income statement for 20X1 is as follows: STERLING TIRE COMPANY Income Statement For the Year Ended December 31, 20x1 Sales (31,000 tires at $82 each) $2,542,000 Variable costs (31,000 tires at $41) 1,271,000 Fixed costs 510,000 Earnings before interest and taxes (EBIT) $ 761,000 Interest expense 55,500 Earnings before taxes (EBT) $ 705,500 Income tax expense (256) 176, 375 Earnings after taxes (EAT) $ 529,125 .. 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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