24. Controlling operations with operating leverage. Treat each case independently. (EBIT is earmings before interest and taxes) 1. A business has an operating leverage of 5.0. If it wants to increase its EBIT by 200%, what would be its change in sales? A business has projected to increase its sales by 10% and wants to increase its EBIT by 120%, what would be its degree of operating leverage? A business has an operating leverage of 7.0 and expects to increase its sales by 20%, what would be its percentage change in EBIT? A business has an operating leverage of 4.5 and expects a decrease in sales of 15%, what would be the change EBIT? 2. 3. 4.
24. Controlling operations with operating leverage. Treat each case independently. (EBIT is earmings before interest and taxes) 1. A business has an operating leverage of 5.0. If it wants to increase its EBIT by 200%, what would be its change in sales? A business has projected to increase its sales by 10% and wants to increase its EBIT by 120%, what would be its degree of operating leverage? A business has an operating leverage of 7.0 and expects to increase its sales by 20%, what would be its percentage change in EBIT? A business has an operating leverage of 4.5 and expects a decrease in sales of 15%, what would be the change EBIT? 2. 3. 4.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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#24 ANSWER ALL THE QUESTIONS AND SHOW YOUR SOLUTION
Transcribed Image Text:24. Controlling operations with operating leverage. Treat each case independently. (EBIT
is earnings before interest and taxes)
A business has an operating leverage of 5.0. If it wants to increase its EBIT by 200%,
what would be its change in sales?
1.
2.
A business has projected to increase its sales by 10% and wants to increase its
EBIT by 120%, what would be its degree of operating leverage?
A business has an operating leverage of 7.0 and expects to increase its sales by
20%, what would be its percentage change in EBIT?
4. A business has an operating leverage of 4.5 and expects a decrease in sales of
15%, what would be the change EBIT?
3.
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