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15-5A. (Leverage Analysis) You have developed the following analytical income statement for your corporation. It represents the most recent year's...

15-5A. (Leverage Analysis) You have developed the following analytical 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. At this level of output, what is the degree of operating leverage>
b. What is the degree of financial leverage?
c. What is the degree of combined leverage?
d. What is the firm’s break-even point in sales dollars?
e. If sales should increase by 25 percent, by what percent would earnings before taxes (and net income) increase?

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leverage-516901.xls

Problem No:15-5A
Note:1
Particulars Amount(Rs) Sales
Less:Variable
Contribution
Less: Fixed Cost
Earnings before interest and tax(EBIT)
Less: Interest Expenses
Earning before Tax(EBT)
Less: Taxes...

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