Homework Help is Here – Start Your Trial Now!
Business
Finance
i need the answer quickly

i need the answer quickly

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
See similar textbooks
icon
Related questions
Question
i need the answer quickly
Problen The current income statement for Halifax Tire Inc. is provided below. Sales $8,000,000 Variable Costs 2,500,000 Fixed Costs 3,000,000 Depreciation 400,000 ЕBIT 2,100,000 Interest ($10,000,000 at 9%) 900,000 EBT 1,200,000 Tax (at 40%) 480,000 Earnings After Tax (Net Income) 720,000 a) Calculate the degree of operating leverage. b) Calculate the degree of financial leverage. ( c) Calculate the degree of combined leverage. (. d) What percentage change in EBIT would result from a 10% decrease in sales? What percentage change in EPS would result from a 10% decrease in sales? e) Assuming the company has 200,000 shares issued and outstanding. What would the new EPS if sales decreased by 10%?
Transcribed Image Text:Problen The current income statement for Halifax Tire Inc. is provided below. Sales $8,000,000 Variable Costs 2,500,000 Fixed Costs 3,000,000 Depreciation 400,000 ЕBIT 2,100,000 Interest ($10,000,000 at 9%) 900,000 EBT 1,200,000 Tax (at 40%) 480,000 Earnings After Tax (Net Income) 720,000 a) Calculate the degree of operating leverage. b) Calculate the degree of financial leverage. ( c) Calculate the degree of combined leverage. (. d) What percentage change in EBIT would result from a 10% decrease in sales? What percentage change in EPS would result from a 10% decrease in sales? e) Assuming the company has 200,000 shares issued and outstanding. What would the new EPS if sales decreased by 10%?
Expert Solution
steps

Step by step

Solved in 3 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Public Issue
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
SEE MORE TEXTBOOKS