3. Cerry Technologies has sales of $4,000,000. The company's fixed operating costs total $700,000 and its variable costs equal 60 percent of sales, so the company's current operating income is $900,000. The company's interest expense is $300,000. What is the company's degree of total operating leverage? What is the company's degree financial leverage?
3. Cerry Technologies has sales of $4,000,000. The company's fixed operating costs total $700,000 and its variable costs equal 60 percent of sales, so the company's current operating income is $900,000. The company's interest expense is $300,000. What is the company's degree of total operating leverage? What is the company's degree financial leverage?
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
Problem 1PS
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Transcribed Image Text:3. Cerry Technologies has sales of $4,000,000. The
company's fixed operating costs total $700,000 and
its variable costs equal 60 percent of sales, so the
company's current operating income is $900,000.
The company's interest expense is $300,000.
What is the company's degree of total operating
leverage? What is the company's degree financial
leverage?
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