Flingen Inc. reveals the following information in its annual report for FY 2021 Income Statement Items Sales $11,000,000 Cost of goods sold $5,700,000 Pretax earnings $800,000 Selected Balance Sheet Items Merchandise inventory $100,000 Total assets $2,500,000 Management plans to cut cost of goods sold by 6% for the upcoming year while retaining the same sales. What will Flingen's profit leverage effect be for 2022? (Select the closest answer to your calculation of profit leverage).
Flingen Inc. reveals the following information in its annual report for FY 2021 Income Statement Items Sales $11,000,000 Cost of goods sold $5,700,000 Pretax earnings $800,000 Selected Balance Sheet Items Merchandise inventory $100,000 Total assets $2,500,000 Management plans to cut cost of goods sold by 6% for the upcoming year while retaining the same sales. What will Flingen's profit leverage effect be for 2022? (Select the closest answer to your calculation of profit 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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Flingen Inc. reveals the following information in its annual report for FY 2021
| Income Statement Items | |
| Sales | $11,000,000 |
| Cost of goods sold | $5,700,000 |
| Pretax earnings | $800,000 |
| | |
| Selected Balance Sheet Items | |
| Merchandise inventory | $100,000 |
| Total assets | $2,500,000 |
Management plans to cut cost of goods sold by 6% for the upcoming year while retaining the same sales. What will Flingen's profit leverage effect be for 2022? (Select the closest answer to your calculation of profit leverage).
Group of answer choices
$13.05
$10.40
$9.63
$11.15
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