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 K16 Tax rate 40%

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
icon
Related questions
Question

kindly solve d part

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%
Expert Solution
steps

Step by step

Solved in 6 steps

Blurred answer
Knowledge Booster
Market Efficiency
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.
Recommended textbooks for you
Essentials Of Investments
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
FUNDAMENTALS OF CORPORATE FINANCE
FUNDAMENTALS OF CORPORATE FINANCE
Finance
ISBN:
9781260013962
Author:
BREALEY
Publisher:
RENT MCG
Financial Management: Theory & Practice
Financial Management: Theory & Practice
Finance
ISBN:
9781337909730
Author:
Brigham
Publisher:
Cengage
Foundations Of Finance
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education