Based on the below data, compute for the Degree of Financial Leverage: Sales                                                100,000,000 Variable Cost                                  40,000,000 Fixed Cost                                          40,000,000 Capital employed of the company                80,000,000 Debts        (carries 10% interest)                40,000,000

Sales revenue is $11,250,000 Variable expenses is $2,500,000 Total expenses is $8,750,000 Operating income is $2,5000,000   How would you find the degree of operating leverage?

Consider the following summary modified income statement for Tech Inc.: Sales $593,000 Variable Operating Costs 252,000 Contribution Margin $341,000 Fixed Operating Costs 121,000 Operating Income $220,000 Interest Expense 26,000 Net Income $194,000 Calculate Tech's degree of operating leverage. A В C E 1 2 Degree of Operating Leverage = 4 5 7 8 9 10 3. 6.

Sales (30,000units)                                                                  P 150,000            Variable costs                                                                  100,800            Contribution margin                                                    P   49, 200            Fixed manufacturing costs                                                24,000            Operating income                                                        P   25,200            Interest                                                                              18,000           Earnings before taxes                                                 P      7,200           Taxes (at 31%)                                                                     2,160           Net income                                                                  P 5,040                         Shares outstanding                                                          600 The degree of combined leverage…

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5 Edmonds Industries is forecasting the following income statement: Sales Operating costs (excl. Depr. & Amort.) EBITDA Depreciation EBIT Interest EBT Taxes (40%) Net income $10,000,000 5,500,000 4,500,000 1,200,000 $ 3,300,000 500,000 $ 2,800,000 1,120,000 $ 1,680,000 The CEO would like to see higher sales and a forecasted net income of $2,100,000. Assume that operating costs (excluding depreciation and amortization) are 55% of sales and that depreciation and amortization and interest expenses will increase by 6%. The tax rate, which is 40%, will remain the same. (Note that while the tax rate remains constant, the taxes paid will change.) What level of sales would generate $2,100,000 in net income?