6. Given the following information for Computech, compute the firm's degree of combined leverage (dollars are in thousands except EPS): BASIC 2015 2016 Sales $ 500,000 $ 570,000 Fixed costs 120,000 120,000 Variable costs 300,000 342,000 Earnings before interest and taxes 80,000 108,000 Interest 30,000 30,000 Earnings per share (EPS) $ 1.00 $ 1.56

6. Given the following information for Computech, compute the firm's degree of combined leverage (dollars are in thousands except EPS): BASIC 2015 2016 Sales $ 500,000 $ 570,000 Fixed costs 120,000 120,000 Variable costs 300,000 342,000 Earnings before interest and taxes 80,000 108,000 Interest 30,000 30,000 Earnings per share (EPS) $ 1.00 $ 1.56

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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Compute the percentage change of Earnings Per Share Compute the Combined Leverage of the expected unit Compute the Operating Leverage of the expected units. Compute the Financial Leverage of the expected units. Compute the cOMBINED Leverage of the expected units.
What is the comparison (analysis) of the Returned on Invested Capital (ROIC) of Industry Average Ratio and the Company A Ratio? THE ROIC ratios has decreased and increased. Why? Industry Average ROIC 2015: 4.30% 2016: 4.90% 2017: 3.00% 2018: 2.58% 2019: 4.02% Company A Total ROIC 2015: 3.77% 2016: 1.46% 2017: 2.90% 2018: 2.94% 2019: 2.24%
Firm K has a margin of 9%, turnover of 1.4, and sales of $1,610,000. Required: Calculate Firm K's net Income, average total assets, and return on Investment (ROI). Choose Factors: Choose Numerator: Net Income * Choose Factors: X Average Total Assets /Choose Denominator: = 1 Return on Investment Choose Numerator: /Choose Denominator: 1 1 Net Income Net Income Average Total Assets Average Total Assets 0 Return on Investment Return on Investment 0
Please, use these formulas that are in the image only. XYZ company expects in the coming year: sales of 40000 units at $10 per unit, variable operating costs of $4 per unit, fixed operating costs of $30000, interest of $50000, and preferred stock dividends of $24000. The Company is in the 40% tax bracket. a. Compute the following and explain their meaning: 1- Degree of Operating Leverage (DOL). 2- Degree of Financial Leverage (DFL). 3- Degree of Total Leverage (DTL). b. If XYZ company’s Earnings Per Share (EPS) is currently $7.2, estimate its EPS in case of a 10% increase in earnings before interest and tax (EBIT).
* A company provided the following information: ROA= 15% Financial Leverage Ratio 1.8 What is the company's financial leverage percentage? (Round your answe
(Using degree of operating leverage) Last year Baker-Huggy Inc. had fixed costs of $150,000 and net operating income of $34,000. If sales increase by 18 percent, by how much will the firm's NOI increase? What would happen to the firm's NOI if sales decreased by 21 percent? If sales increase by 18%, the change in the firms NOI will be (a decrease or increase) of _ %
Notes for 2024: Sales are estimated to be $85,000 in 2024 Assume the following: COGS are Variable $2000 of the Operating Expenses are Fixed Depreciation and the Remainder of the Operating Expenses are Fixed The firm will maintain its dividend payout ratio this year Cash, Accounts Receivable, Inventories, Net Plant, Accounts Payable and Accrued Payables are Spontaneous Market Securities, Bonds Payable and Common Stock are Discretionary $500 of Bonds Payable are Current and Will be Repaid at the Beginning of the Year Below is the 2023 Income Statement and Balance Sheet data you will be using to complete your forecast. Income Statement For the Year Ended December 31, 2023 Sales 70,000 COGS 45,000 Gross Profit 25,000 Operating Expenses 8,000 Depreciation 5,000 13,000 EBIT 12, 000 Interest Expense 1,300 EBT 10, 700 Tax Expense 2, 247 Earning After Taxes 8, 453 Dividends 3,000 Addition to Retained Earnings 5, 453 Balance Sheet December 31, 2023 Cash 8, 100 Marketable Securities 2,000…
Calculate the value of the firm using the following perpetual data. Assume no growth. Revenue: $643 Salaries and Materials: $400 Depreciation: $100 Tax Rate 30% Cost of Equity 9% Cost of Debt 4.286% D/E 2:1
If financial leverage of a firm is 4, Interest 6,00,000, Operating Leverage is 3, Variable cost to sales is 66.66%, Income tax rate is 30%, Number of Equity Shares 1, 00, 000. Calculate fixed cost and EPS of the firms. (For your reference, OL = Contribution/EBIT; FL = EBIT/EBT and CL = OL*FL)
2. An A firm has sales of $10 million, variable costs of $4 million, fixed expenses of $1.5 million, interest costs of $2 million, and a 30 percent average tax rate. a) Compute its DOL, DFL, and DCL. b) What will be the expected level of EBIT and net income if next year's sales rise 10 percent? c) What will be the expected level of EBIT and net income if next year's sales fall 20 percent?
Calculating the degrees of leverage Acme Inc. forecasts the following income statement for the next year: Income Statement For the Year Ended on December 31 Net sales $960,000 Less: Variable costs 532,000 Less: Fixed costs 123,000 EBIT, or NOI $305,000 Less: Interest 196,000 EBT $109,000 Less: Taxes 43,600 Net income $65,400 Acme Inc. uses no preferred stock in its capital structure. Calculate the degrees of operating, financial, and total leverage for Acme Inc. and select your answers in the following table. DOL 1.40 or 1.64 or 1.72 or 1.81 DFL 1.88 or 2.02 or 2.18 or 2.80 DTL 3.40 or 3.48 or 3.57 or 3.93

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