Degree of operating leverage.

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Answer 1

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Chapter 14, Problem 13P

a.

Summary Introduction

To compute: Degree of operating leverage.

b.

Summary Introduction

To compute: Degree of financial leverage.

c.

Summary Introduction

To compute: Forecasted earnings per share when sales drop to $38 million.

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QUESTION 1 Examine the information provided below and answer the following question. (10 MARKS) The hockey stick model of start-up financing, illustrated by the diagram below, has received a lot of attention in the entrepreneurial finance literature (Cumming & Johan, 2013; Kaplan & Strömberg, 2014; Gompers & Lerner, 2020). The model is often used to describe the typical funding and growth trajectory of many startups. The model emphasizes three main stages, each of which reflects a different phase of growth, risk, and funding expectations. Entrepreneur, 3 F's Debt(banks & microfinance) Research Business angels/Angel Venture funds/Venture capitalists Merger, Acquisition Grants investors PO Public market Growth (revenue) Break even point Pide 1st round Expansion 2nd round 3rd round Research commercial idea Pre-seed Initial concept Seed Early Expansion Financial stage Late IPO Inception and prototype Figure 1. The hockey stick model of start-up financing (Lasrado & Lugmayr, 2013) REQUIRED:…

critically discuss the hockey stick model of a start-up financing. In your response, explain the model and discibe its three main stages, highlighting the key characteristics of each stage in terms of growth, risk, and funding expectations.

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Answer 2

Question

Chapter 14, Problem 13P

a.

Summary Introduction

To compute: Degree of operating leverage.

b.

Summary Introduction

To compute: Degree of financial leverage.

c.

Summary Introduction

To compute: Forecasted earnings per share when sales drop to $38 million.

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Answer 3

Question

Chapter 14, Problem 13P

a.

Summary Introduction

To compute: Degree of operating leverage.

b.

Summary Introduction

To compute: Degree of financial leverage.

c.

Summary Introduction

To compute: Forecasted earnings per share when sales drop to $38 million.

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Answer 4

Question

Chapter 14, Problem 13P

a.

Summary Introduction

To compute: Degree of operating leverage.

b.

Summary Introduction

To compute: Degree of financial leverage.

c.

Summary Introduction

To compute: Forecasted earnings per share when sales drop to $38 million.

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Answer 5

Chapter 14, Problem 13P

a.

Summary Introduction

To compute: Degree of operating leverage.

b.

Summary Introduction

To compute: Degree of financial leverage.

c.

Summary Introduction

To compute: Forecasted earnings per share when sales drop to $38 million.

Answer 6

Chapter 14, Problem 13P

a.

Summary Introduction

To compute: Degree of operating leverage.

Answer 7

Chapter 14, Problem 13P

a.

Summary Introduction

To compute: Degree of operating leverage.

Answer 8

b.

Summary Introduction

To compute: Degree of financial leverage.

Answer 9

b.

Summary Introduction

To compute: Degree of financial leverage.

Answer 10

c.

Summary Introduction

To compute: Forecasted earnings per share when sales drop to $38 million.

Answer 11

c.

Summary Introduction

To compute: Forecasted earnings per share when sales drop to $38 million.

Answer 12

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Answer 13

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Answer 14

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Answer 15

Ch. 14.A - Prob. 1QTD Ch. 14.A - Prob. 2QTD Ch. 14.A - Prob. 3QTD Ch. 14.A - Prob. 2P Ch. 14.A - Prob. 3P Ch. 14.A - Prob. 4P Ch. 14.A - Prob. 5P Ch. 14.A - Prob. 6P Ch. 14.A - Prob. 7P Ch. 14.A - Prob. 8P

Degree of operating leverage.

Solution Summary: The author explains the degree of operating leverage and financial leverage, and calculates forecasted earnings per share when sales drop to 38 million.

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To compute: Degree of operating leverage.

To compute: Degree of financial leverage.

To compute: Forecasted earnings per share when sales drop to $38 million.

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Chapter 14 Solutions