2010-06-24_142333_FinanceLev

2010-06-24_142333_FinanceLev - Remember to complete all...

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Remember to complete all parts of the problems and report the results of your analysis. Do not forget to show the necessary steps and explain how your attained that outcome. Everything should be done in EXCEL including any conclusions in 50 words or less. Problem 12-4 Leverage Analysis: You have developed the following income statement for your corporation. It represents the most recent year’s operations, which ended yesterday. Sales $45,750,000 Variable costs 22,800,000 Revenue before Fixed costs $22,950,000 Fixed Costs 9,200,000 EBIT $13,750,000 Interest Expense 1,350,000 Earnings Before Taxes $12,400,000 Taxes @ 50% 6,200,000 Net Income $6,200,000 Your supervisor in the controller’s office has just handed you a memorandum asking for written responses to the following questions: a. What is the firm’s break even point in sales dollars? b. If sales should increase by 25% by what percent would earnings before taxes (and net income) increase? a.
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2010-06-24_142333_FinanceLev - Remember to complete all...

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