How many units does the firm need to sell to reach the cash break-even point?
10 Degree of leverage (LO2 and 5) The S STERLING TIRE COMPANY Income Statement For the Year Ended December 31, 20X1 Sales (20,000 tires at $60 each) $1,200,000 Less: Variable costs (20,000 tires at $30) 600,000 Fixed costs 400,000 Earnings before interest and taxes (EBIT) 200,000 Interest expense 50,000 Earnings before taxes (EBT) 150,000 Income tax expense (30%) 45,000 Earnings after taxes (EAT) $105,000 Given this income statement, compute the following: a. Degree of operating le b. Degree of financial lev c. Degree of combined le d. Break-even point in un Show All work
Sterling Tire Company’s income statement for 20X1 is as follows: everage. Q(P-VC) / Q(P-VC) - FC verage. EBIT/EBIT-I everage. Q(P-VC) / Q(P-VC) - FC - I nits. Fixed Cost / Price per Unit - Variable Cost 000-$400,000 = $200,000 ) - $400,000 - $50,000 ,000
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