THERE ARE 90,000 SHARES!

Year ended, Dec. 31 Sales Variable Costs Contribution Fixed Costs Earnings before interest and taxes (EBIT) Interest Expense Earnings before taxes (EBT) Taxes @ 35% Earnings after taxes Shares Earnings per Share (EPS) $2,500,000 1,000,000 1,500,000 890,000 610.000 95,000 515,000 180.250 334,750 90.000 a) Given the above income statement for Balmoral Grocers Ltd., calculate the earnings per share (EPS). (1 point) b) Given the above income statement for Balmoral Grocers Ltd., calculate the degree of operating leverage.(2 points) c) Given the above income statement for Balmoral Grocers Ltd., calculate the degree of financial leverage.(2 points) d) Given the above income statement for Balmoral Grocers Ltd., calculate the degree of combined or total leverage. (1.5 points) e) Interpret in words what the number you arrived at in c) for the degree of financial leverage means using the special definition for financial leverage. (2 points) f) Find the percentage decrease in earnings per share if there is a 15% decrease in sales revenue. (1.5 points) 2. Balmoral Grocers Ltd. would like to expand its' operations. The financial manager is considering two different plans to raise an additional $500,000. It is anticipated that sales revenue will be $3,500,000 after the expansion. The new variable cost figure will be $1,500,000, and the new fixed cost figure will be $1,000,000. These figures are the same for both plans. The existing $95,000 interest expense figure as well as any increased interest expense will have to be met. The tax rate remains at 35%. Use the data in question #1 to answer this question. Plan A - Issue an additional 50,000 shares at $10 per share. Calculate the earnings per share under Plan A. (5 points)