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The Sterling Tire Company's income statement for 20XX is as follows: STERLING TIRE COMPANY Income Statement Year ended December 31, 20XX Sales (40,000 tires at

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The Sterling Tire Company's income statement for 20XX is as follows: STERLING TIRE COMPANY Income Statement Year ended December 31, 20XX Sales (40,000 tires at $55 each) Less: Variable costs (40,000 tires at $30) $ 2,200,000 1,200,000 1,000, eee 840,000 Contribution margin Less: Fixed costs Earnings before interest and taxes (EBIT) Interest expense 160, eee 60.ee Earnings before taxes (EBT) Income tax expense (35%) 100,000 35,000 Earnings ofter taxes (EAT) $ 65,000 Given this income statement, compute the following a. Degree of operating leverage (Round the final answer to 2 decimal places.) DOL X b. Degree of financial leverage (Round the final answer to 2 decimal places.) E b. Degree of financial leverage. (Round the final answer to 2 decimal places.) DFL c-1. Degree of combined leverage (Do not round the intermediate calculations. Round the final answer to 2 decimal places.) DCL X c-2. Using your answers to a. and b. calculate the percentage increase in EBIT and EBT from a 20 percent increase in sales volume. (Do not round the intermediate calculations. Round the final answers to 2 decimal places.) EBIT c-3. Does financial or operating leverage have the greater impact? ODOL ODFL d. Break-even point in units. (Round the final answer to the nearest whole number.) Break-even point tires e. Break-even point considering the interest expense as a fixed cost. d. Break-even point in units (Round the final answer to the nearest whole number.) tires Break-even point e. Break-even point considering the interest expense as a fixed cost Break-even point tires

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