Derive the financial leverage Sales60000Variable CostsFixed CostsEarnings Before Interest and TaxesInterest Expense360002000040003000Earnings Before Taxes1000Taxes350Net Income650Additional DataEstimated Pie Sales in Units4000Price per Pie15Variable Cost per PieТаx Rate0.35

In order to determine the degree of financial leverage, the Earnings before interest & tax are…

Sales 60000 Variable Costs 36000 Fixed Costs Earnings Before Interest and Tawes 20000 4000 Interest Expense 3000 Earnings Before Taxes 1000 Tawes 350 Net Income 650 Additional Data Estimated Pie Sales in Units 4000 Price per Pie 15 Variable Cost per Pie Tax Rate 0.35

Sales 60000 Variable Costs 36000 Fixed Costs Earnings Before Interest and Tawes 20000 4000 Interest Expense 3000 Earnings Before Taxes 1000 Tawes 350 Net Income 650 Additional Data Estimated Pie Sales in Units 4000 Price per Pie 15 Variable Cost per Pie Tax Rate 0.35

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Derive the financial leverage

Sales
60000
Variable Costs
Fixed Costs
Earnings Before Interest and Taxes
Interest Expense
36000
20000
4000
3000
Earnings Before Taxes
1000
Taxes
350
Net Income
650
Additional Data
Estimated Pie Sales in Units
4000
Price per Pie
15
Variable Cost per Pie
Таx Rate
0.35

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