This preview shows pages 1–2. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.View Full Document
Unformatted text preview: Degree of Financial Leverage (DFL) EBIT EBT - [PS Div ] = X 1-T Example given interest is $20,000. Then EBIT is ? and EBT is ? and PS Dividends are $2000 and the Tax Rate is 50%: $50,000 $30,000 [$2000 ] = 1.923x 1-.5 Degree of Total Leverage (DTL) DOL * DFL = DTL 3x * 1.923x = 5.769x...
View Full Document
- Spring '10