I want to correct answer general accounting question What percentage change in sales occurs if profitsincrease by 4% when the firm's degree ofoperating leverage is 4.2?

Step 1: Definition of Degree of Operating Leverage (DOL)The Degree of Operating Leverage (DOL)…

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Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter16: Capital Structure Decisions

Section: Chapter Questions

Problem 2MC

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· What does a degree of financial leverage (DFL) of 2.0 indicate? O For every 1 percent change in its EBIT, the firm's EPS will change by 2 percent. O For every 1 percent change in its EBIT, the firm's sales will change by 2 percent. For every 1 percent change in its sales, the firm's EBIT will change by 2 percent. For every 1 percent change in its EPS, the firm's EBIT will change by 0.5 percent. ○ For every 1 percent change in its EPS, the firm's sales will change by 0.5 percent.
Your business plan for your proposed start-up firm envisions first-year revenues of $180,000, fixed costs of $60,000, and variable costs equal to one-third of revenue. a. What are expected profits based on these expectations? (Round your answer to nearest whole number.) Expected profit b. What is the degree of operating leverage based on the estimate of fixed costs and expected profits? (Round your answer to 2 decimal places.) Degree of operating leverage c. If sales are 10% below expectation, what will be the percentage decrease in profits? (Round your answer to nearest whole number.) Decrease in profits %
Suppose sales volume increase by the same percentage for Company X and Company Y. Use CVP analysis to explain which company will experience a larger percentage increase in profits? Company X - Dominated by fixed expenses; or Company Y - Dominated by variable expenses.
which one is correct please confirm? QUESTION 7 A firm that has a 2.5 DOL (degree of operating leverage) would find that an 8% increase in EBIT would result from a ____ increase in sales. a. 3.2% b. 5.4% c. 20.0% d. 2.0%
The degree of operating leverage is 2.5 and degree of financial leverage is 1.6 of a firm then the %change im EPS is what if quantity increases by 5%?
which of the following occurs if a company decreases its selling price per unit? a. net income increase b. more than one of the answers would occur c. contribution margin ration increase d. break even point increase e. contribution magrin increase
Sheffield Corp.'s degree of operating leverage is 1.9. Warren Corporation's degree of operating leverage is 6. Warren's earnings would go up (or down) by as much as Sheffield's with an equal increase (or decrease) in sales. O 4.1 times O 3.2 times O 0.9 O 7.9 times
When sales volume increases, which company will experience a larger percentage increase in profit: company X, which has mostly fixed expenses, or company Y, which has mostly variable expenses?
What is the firm's ROE ???

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What percentage change in sales occurs if profits increase by 4% when the firm's degree of operating leverage is 4.2?