Use the below information to answer the following question. Sales (1,000 units)$200,000 Variable costs 110,000 Contribution margin 90,000 Fixed manufacturing costs 40,000 Operating income 50,000 Interest 10,000 Earnings before taxes 40,000 Taxes (30%) 12,000 Net income$28,000 Shares Outstanding 1,000 Refer to the table. The degree of financial leverage (DFL) is _____.

The degree of financial leverage (DFL) is a leverage ratio that determines how sensitive a…

Answered: Use the below information to answer the…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter14: Capital Structure Management In Practice

Section: Chapter Questions

Problem 6P

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Use the below information to answer the following question.


Sales (1,000 units)	$	200,000
Variable costs		110,000
Contribution margin		90,000
Fixed manufacturing costs		40,000
Operating income		50,000
Interest		10,000
Earnings before taxes		40,000
Taxes (30%)		12,000
Net income	$	28,000
Shares Outstanding		1,000

Refer to the table. The degree of financial leverage (DFL) is _____.

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