Question # 4From the following income statement of Sundahl company, for the year1 & 2:(a)Calculate operating, financial and combined leverage of both yearsand explain its interpretation. Which year has the greater amountof business risk and why?• The cost of goods sold comprises of 60% fixed cost andremaining variable cost.(b)Sundahl CompanyIncome StatementsFor the Years 1 and 2Year 1Year 2Sales$ 2,000,000(1.400,000)$ 600,000$ 1,800,000Less: Cost of goods soldGross marginLess operating expenses:Selling expensesAdministrative expensesOperating incomeLess: Interest expenseIncome before taxes(1,200,000)$ 600,000(300,000)(300,000)(100,000)(110.000)$ 200.000(50,000)$ 190,000(40,000)$ 150,000150,000Extract the necessary financial ratios and explain its interpretation.Question # 5Explain the basic obiectives of financial decision making in different

Leverage is the measurement of risk. Under this, the company is evaluating the current situation and…

Question # 4 From the following income statement of Sundahl company, for the year 1 & 2: (a)Calculate operating, financial and combined leverage of both years and explain its interpretation. Which year has the greater amount of business risk and why? • The cost of goods sold comprises of 60% fixed cost and remaining variable cost. (b) Sundahl Company Income Statements For the Years 1 and 2 Year I $ 2.000,000 (1.400,000) S 600.000 Year 2 Sales Less: Cost of goods sold Gros margin Less operating expenses: Selling eapenses Administrative expenses $1,800,000 (1,200,000) $ 600,000 (300,00) (300,000) Operating income Less. Interest expense Income before taxes (100,000) $ 200.000 (50,00) 150.000 (110.000) $ 190.000 (40,000) $ 150.000 Extract the necessary financial ratios and explain its interpretation.

Question # 4 From the following income statement of Sundahl company, for the year 1 & 2: (a)Calculate operating, financial and combined leverage of both years and explain its interpretation. Which year has the greater amount of business risk and why? • The cost of goods sold comprises of 60% fixed cost and remaining variable cost. (b) Sundahl Company Income Statements For the Years 1 and 2 Year I $ 2.000,000 (1.400,000) S 600.000 Year 2 Sales Less: Cost of goods sold Gros margin Less operating expenses: Selling eapenses Administrative expenses $1,800,000 (1,200,000) $ 600,000 (300,00) (300,000) Operating income Less. Interest expense Income before taxes (100,000) $ 200.000 (50,00) 150.000 (110.000) $ 190.000 (40,000) $ 150.000 Extract the necessary financial ratios and explain its interpretation.

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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The following income statement is provided for Vargas, Inc. What is this company's magnitude of operating leverage? Assume that net income is equal to operating income.
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Accouting Analysis of Leverage Based on the financial statements of Cowan Kitchen Counters, Inc., as shown below: Cowan Kitchen Counters, Inc.Comparative Income StatementFor Years Ended December 31, 20-2 and 20-1 20-2 20-1 Net Sales (all on account) $2,584,000 $2,163,000 Cost of goods sold 1,868,200 1,616,800 Gross profit $715,800 $546,200 Operating expenses 315,200 221,800 Other expense (interest) 24,200 24,200 Income tax expense 176,800 106,300 Net income $199,600 $193,900 Cowan Kitchen Counters, Inc.Comparative Balance SheetDecember 31, 20-2 and 20-1 20-2 20-1 Cash $255,400 $243,200 Government notes 250,000 250,000 Accounts receivable (net) 903,500 797,500 Merchandise inventory 983,600 913,600 Supplies and prepayments 143,200 47,500 Land 108,200 108,200 Building (net) 330,000 390,600 Office…
The following information was extracted from the Income Statement of Benguela Limited for 2020 financial year. Income Statement for the year ended 31 December 2020 Sales (35 000 units at N$250) 8 750 000 Variable cost (35 000 at N$70) 2 450 000 Contribution 6 300 000 Fixed cost 3 000 000 Earnings before interest and tax 3 300 000 Interest expense 1 700 000 Earnings before tax 1 600 000 Taxation 480 000 Earnings after tax 1 120 000 Required: Calculate the degree of operating leverage and Calculate the degree of financial leverage?
C
Margin, Turnover, Return on Investment Pelak Company had sales of $4,945,000, expenses of $4,566,000, and average operating assets of $3,690,000. Required: 1. Compute the operating income. $ 2. Compute the margin (as a percent) and turnover ratio. If required, round your answers to one decimal place. Margin Turnover % 3. Compute the ROI as a percent. Use the part 2 final answers in these calculations and round the final answer to two decimal places. %
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using the following table (image attached) calculate the financial leverage multiplier used in the BMC system

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