Financial Accounting Velocity Dynamics Ltd. has a degree of pretax cash flow operating leverageequal to 1.20. If the firm's EBITDA was $3,000 last year while its depreciationand amortization expense was $200 in the same year, what was the firm'sdegree of accounting operating leverage?

Step 1: First, calculate the value of Fixed costs using the Pretax cash flow operating leverage and…

Answered: Velocity Dynamics Ltd. has a degree of…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter3: Evaluation Of Financial Performance

Section: Chapter Questions

Problem 10P

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Velocity Dynamics Ltd. has a degree of pretax cash flow operating leverage equal to 1.20. If the firm's EBITDA was $3,000 last year while its depreciation and amortization expense was $200 in the same year, what was the firm's degree of accounting operating leverage?