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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%

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
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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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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