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?
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?
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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Question
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 |
|
|
480 000 |
|
Earnings after tax |
1 120 000 |
Required:
- Calculate the degree of operating leverage and Calculate the degree of financial leverage?
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