Answered: Oceanic Horizons Ltd. has a sales level…

Oceanic Horizons Ltd. has a sales level of $500,000, and the magnitude of operating leverage is 3.0. If sales increase by 20%, by what percentage will profits (net income) increase?

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter7: Corporate Valuation And Stock Valuation

Section: Chapter Questions

Problem 1P: Ogier Incorporated currently has $800 million in sales, which are projected to grow by 10% in Year 1...

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Question

Please help me solve this financial accounting question using the right financial principles.

Oceanic Horizons Ltd. has a sales level of $500,000, and
the magnitude of operating leverage is 3.0. If sales
increase by 20%, by what percentage will profits (net
income) increase?

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