12–15 IntegrativeMultiple leverage mcasures and prediction Carolina Fastencr, Inc., makes a patented marine bulkhead latch that wholesalces for $6.00. Each latch has variable operating costs of $3.50. Fixed operating costs are $50,000 per year. The firm pays $13,000 interest and preferred dividends of $7,000 per year. At this point, the firm is selling 30,000 latches a ycar and is taxed at 40%. a. Calculate Carolina Fastener's operating breakeven point. b. On the basis of the firm's current sales of 30,000 units per ycar and its interest and preferred dividend costs, calculate its EBIT and net profits. c. Calculate the firm's degrcc of operating leverage (DOL).
12–15 IntegrativeMultiple leverage mcasures and prediction Carolina Fastencr, Inc., makes a patented marine bulkhead latch that wholesalces for $6.00. Each latch has variable operating costs of $3.50. Fixed operating costs are $50,000 per year. The firm pays $13,000 interest and preferred dividends of $7,000 per year. At this point, the firm is selling 30,000 latches a ycar and is taxed at 40%. a. Calculate Carolina Fastener's operating breakeven point. b. On the basis of the firm's current sales of 30,000 units per ycar and its interest and preferred dividend costs, calculate its EBIT and net profits. c. Calculate the firm's degrcc of operating leverage (DOL).
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text:12–15 IntegrativeMultiple leverage mcasures and prediction Carolina Fastencr,
Inc., makes a patented marine bulkhead latch that wholesalces for $6.00.
Each latch has variable operating costs of $3.50. Fixed operating costs are
$50,000 per year. The firm pays $13,000 interest and preferred dividends of
$7,000 per year. At this point, the firm is selling 30,000 latches a ycar and is
taxed at 40%.
a. Calculate Carolina Fastener's operating breakeven point.
b. On the basis of the firm's current sales of 30,000 units per ycar and
its interest and preferred dividend costs, calculate its EBIT and net
profits.
c. Calculate the firm's degrcc of operating leverage (DOL).
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