A Summarized Income Statement for Leveraged Inc The Degree of Financial Leverage Is:
A)$150,000/$30,000
B)$150,000/$120,000
C)$1,000,000/$400,000
D)$150,000/$80,000

question 25

Multiple Choice

A summarized income statement for Leveraged Inc.is presented below. $\begin{array}{lr}\text { Sales } & \$ 1,000,000 \\\text { Cost of Sales } &600,000\\\text {Gross Profit }&\$400,000\\\text { Operating Expenses}&250,000\\\text {Operating Income }&\$150,000\\\text {Interest Expense }&30,000\\\text {Earnings Before Tax }&\$120,000\\\text { Income Tax}&40,000\\\text { Net Income}&\$80,000\\\end{array}$ The degree of financial leverage is:

• A)$150,000/$30,000
• B)$150,000/$120,000
• C)$1,000,000/$400,000
• D)$150,000/$80,000
• E)$400,000/$120,000

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