degree of operating leverage? Question:Frank Corp has fixed costs of $300,000 and profit of$150,000.What is its degree of operating leverage?

I explained that to calculate the Degree of Operating Leverage (DOL), we use the formula: Degree of…

Answered: Question: Frank Corp has fixed costs of…

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter16: Capital Structure Decisions

Section: Chapter Questions

Problem 2MC

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What is JJ's degree of operating leverage??
Ohio Steel has a degree of operating leverage of 2.9. The company predicted EBIT of $332,000 and EPS of $5.7 for the year. Actual EBIT were $284,000 and EPS were $2.42. What is the degree of financial leverage? What is the degree of total leverage? What were earnings before taxes (EBIT - Interest)? What was the company's gross profit (sales - variable costs)?
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The CFO of Jupiter Jibs (JJ) expects this year’s sales to be $2.5 million. EBIT is expected to be $1 million. The CFO knows that if sales actually turn out to be $2.3 million, JJ’s EBIT will be $880,000. What is JJ’s degree of operating leverage (DOL)?

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Question: Frank Corp has fixed costs of $300,000 and profit of $150,000. What is its degree of operating leverage?