Kermit's Hardware's (KH) Fixed Operating Costs Are $20

question 72

Multiple Choice

Kermit's Hardware's (KH) fixed operating costs are $20.8 million, and its variable cost ratio is 0.30. The firm has $10 million in bonds outstanding with a coupon interest rate of 9%. KH has 200,000 shares of common stock outstanding. The firm has revenues of $32.2 million, and its marginal tax rate is 40%. Compute KH's degree of combined leverage.

• A) 26.8
• B) 5.5
• C) 29.1
• D) 4.7

---

Definitions:

Small Commission

A relatively low percentage or fixed fee paid to an agent or salesperson for facilitating a sale or transaction.

Subjective Measures

Assessments based on personal opinions, interpretations, points of view, or judgments rather than on quantifiable or objective criteria.

Objective Measures

Quantitative indicators used to assess performance or progress in a definitive and unbiased way.

Salesperson's Performance

The assessment of how effectively a salesperson achieves sales targets and contributes to the organization's goals.