From the Following Income Statement, Calculate the
A) Degree of Financial

question 58

Essay

From the following income statement, calculate the
a) degree of financial leverage.
b) degree of operating leverage.
c) degree of combined leverage.
$\quad$ $\quad$ $\quad$ $\quad$ Income Statement
$\quad$ $\quad$ For the year ended $12 / 31 / 10$
$\begin{array} { l r } \text { Sales } & \$ 575,000 \\ \text { TVC } & 260,000 \\ \text { Fixed costs } ( \mathrm { FC } ) & \underline{94,000} \\ \text { EBIT } & 221,000 \\ \text { Interest } & \underline{19.500} \\ \text { EBT } & 201,500 \\ \text { Taxes a } 35 \% & \underline { 70.525 } \\ \text { Net income } & 130,975 \\ \text { Shares outstanding } & 20,000 \\ \text { EPS } & \$ 6.55 \end{array}$

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