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Sales (10,500 skates @ $60 each)                           $    630,000 
Less: Variable costs (10,500 skates at $25)                    262,500 
     Fixed costs                                                          200,000 
                                                             ___________________________
  Earnings before interest and taxes (EBIT)                    167,500 
  Interest expense                                                     62,500 
                                                             ___________________________
  Earnings before taxes (EBT)                                      105,000 
  Income tax expense (30%)                                       31,500 
                                                            ____________________________
  Earnings after taxes (EAT)    $                                  73,500 
                                                           _____________________________

 Enter only numeric value rounded to 2 decimal places.

a) find out the degree of operating leverage.
b) find out the degree of financial leverage.
c) find out the degree of combined leverage.
d) find out the break-even point in units (number of skates).

Corporate Finance, Finance

  • Category:- Corporate Finance
  • Reference No.:- M9650

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