Help The magnitude of operating leveragefor Roshan Enterprises is 3.2 whensales are $200,000 and net income is$40,000. If sales decrease by 5%, netincome is expected to decrease bywhat amount?

Explanation of Degree of Operating Leverage (DOL):Degree of Operating Leverage (DOL) measures how…

Answered: The magnitude of operating leverage for…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter14: Capital Structure Management In Practice

Section: Chapter Questions

Problem 10P

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(Using degree of operating leverage) Last year Baker-Huggy Inc. had fixed costs of $150,000 and net operating income of $34,000. If sales increase by 18 percent, by how much will the firm's NOI increase? What would happen to the firm's NOI if sales decreased by 21 percent? If sales increase by 18%, the change in the firms NOI will be (a decrease or increase) of _ %
Sales for Green Inc. are expected to change by 16%. If Green's degree of operating leverage is 2.20, how much is Green's operating income expected to change? A В D E 1 2 3 Green's operating income is expected to change by: 4 6 7 8 9 10
Increase by what percent?
Correct Answer
What percent?
Accounting EBIT?
Clermont Industries' operating leverage is 4.7. If the company's sales increase by 15%, its net operating income should increase by about: Options-a. 4.7% b. 15.0% c. 70.5% d. 35.3%
Unit sales are expected to reach 30,000 per year, the price per unit is expected to be $80, variable costs are $40 per unit and fixed costs are $80,000 per year. The company pays $250,000 in interest per year. What is the degree of total leverage at the expected levels? Using the degree of total leverage, what is the expected percentage change in earnings per share (EPS) if sales turn out to be 16% lower than expected?
MCQ
(Using degree of operating leverage) Last year Baker-Huggy Inc. had fixed costs of $120,000 and net operating income of $29,000. If sales increase by 17 percent, by how much will the firm's NOI increase? What would happen to the firm's NOI if sales decreased by 20 percent? If sales increase by 17%, the change in the firm's NOI will be of %. (Select from the drop-down menu and round to two decimal places.) If sales decrease by 20%, the change in the firm's NOI will be of %. (Select from the drop-down menu and round to two decimal places.)

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The magnitude of operating leverage for Roshan Enterprises is 3.2 when sales are $200,000 and net income is $40,000. If sales decrease by 5%, net income is expected to decrease by what amount?