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Two firms, Marchand and Gruenler, from the same industry reported the following income statements. Calculate the operating leverage for the two firms...

Two firms, Marchand and Gruenler, from the same industry reported the following income statements. Calculate the operating leverage for the two firms (using 2015 sales as the base).

Marchand, Inc. 2015 2016

Sales $110,000 $150,000

-COGS and Other Variable Operating

Costs - 77,000 - 105,000

-Fixed Operating Costs - 15,000 - 15,000

EBIT         18,000 30,000

-Interest - 0 - 0

EBT 18,000 30,000

-Taxes         - 5,400   - 9,000

Net Income $ 12,600 $ 21,000

 

 

 

Gruenler, Inc. 2003 2004

Sales $110,000 $150,000

-COGS and Other Variable Operating

Costs - 66,000 - 90,000

-Fixed Operating Costs - 25,000   - 25,000

EBIT 19,000   35,000

-Interest - 5,000 - 5,000

EBT 14,000   30,000

-Taxes - 4,200 - 9,000

Net Income $ 9,800 $ 21,000

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Degree of operating leverage = Percent... View the full answer

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