Net opreting income should increase? Accounting Rushenberg Corporation's operating leverage is 10.8. If thecompany's sales increase by 14%, its net operating incomeshould increase by about:A) 151.2%B) 14.0%C) 77.1%D) 10.8%

Operating leverage measures how sensitive a company's net operating income (NOI) is to changes in…

Answered: Rushenberg Corporation's operating…

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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Ogier Incorporated currently has $800 million in sales, which are projected to grow by 10% in Year 1 and by 5% in Year 2. Its operating profitability ratio (OP) is 10%, and its capital requirement ratio (CR) is 80%? What are the projected sales in Years 1 and 2? What are the projected amounts of net operating profit after taxes (NOPAT) for Years 1 and 2? What are the projected amounts of total net operating capital (OpCap) for Years 1 and 2? What is the projected FCF for Year 2?
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Rushenberg Corporation's operating leverage is 10.8. If the company's sales increase by 14%, its net operating income should increase by about: A) 151.2% B) 14.0% C) 77.1% D) 10.8%