Following is the partial financial information of Candy Company. K120,000 K100,000 K800,000 К40 Net income Interest expense Sales Price per unit Variable cost per unit Таx rate K16 40%

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Number of common stock
100,000
Note: the firm has no preferred stock
a) What is the firm's fixed cost?
b) Find the firm's degree of operating leverage, financial leverage and combined leverage.
c) If the firm's sales are increased by 10%, how much earnings per share (in kwacha) would
the firm produce?
d) Find the firm's breakeven point in sales kwacha.
e) Do you want the firm to use higher or lower leverage when there is a bad economy? Explain
with supporting reasons.
Following is the partial financial information of Candy Company.
K120,000
K100,000
K800,000
Net income
Interest expense
Sales
K40
Price per unit
Variable cost per unit
K16
Tax rate
40%
Transcribed Image Text:Number of common stock 100,000 Note: the firm has no preferred stock a) What is the firm's fixed cost? b) Find the firm's degree of operating leverage, financial leverage and combined leverage. c) If the firm's sales are increased by 10%, how much earnings per share (in kwacha) would the firm produce? d) Find the firm's breakeven point in sales kwacha. e) Do you want the firm to use higher or lower leverage when there is a bad economy? Explain with supporting reasons. Following is the partial financial information of Candy Company. K120,000 K100,000 K800,000 Net income Interest expense Sales K40 Price per unit Variable cost per unit K16 Tax rate 40%
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