HARDING COMPANY Income Statement For the Year Ended December 31, 2013 Sales (10,500 skates @ $60 each) ........................................................................... $630,000 Less: Variable costs (10,500 skates at $25) ............................................................ 262,500 Fixed costs .......................................................................................................... 200,000 Earnings before interest and taxes (EBIT) ............................................................... $167,500 Interest expense ...................................................................................................... 62,500 Earnings before taxes (EBT) .................................................................................... $ 105,000 Income tax expense (30%) ...................................................................................... 31,500 Earnings after taxes (EAT) ....................................................................................... $ 73,500 Given this income statement, compute the following: Degree of operating leverage. Degree of financial leverage. Degree of combined leverage. Break-even point in units.
HARDING COMPANY
Income Statement
For the Year Ended December 31, 2013
Sales (10,500 skates @ $60 each) ........................................................................... $630,000
Less: Variable costs (10,500 skates at $25) ............................................................ 262,500
Fixed costs .......................................................................................................... 200,000
Earnings before interest and taxes (EBIT) ............................................................... $167,500
Interest expense ...................................................................................................... 62,500
Earnings before taxes (EBT) .................................................................................... $ 105,000
Income tax expense (30%) ...................................................................................... 31,500
Earnings after taxes (EAT) ....................................................................................... $ 73,500
Given this income statement, compute the following:
- Degree of operating leverage.
- Degree of financial leverage.
- Degree of combined leverage.
- Break-even point in units.
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