This year, the company's sales has increased from $200,000 to $240,000 and its profit has increased by $12,000 compared to last year. The Degree of Operating Leverage (DOL) this year is 4.00. If the sales are expected to increase by 5% next year, how much profit does the company will make next year? A. S 14,400 В. 18,000 С. 18,900 D. 21,600 E. None of the above
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Degree of Operating Leverage = (% change in operating Income / % change in sales) |
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- Last year Mike Corporation's sales were $134 million. If sales grow at 8% per year, how large (in millions) will they be 4 years later? Select one: a. $181.17 b. $186.21 c. $182.31 d. $185.10Last year Rocco Corporation's sales were $700 million. If sales grow at 6.0% per year, how large (in millions) will they be 8 years later? a. $1,148.35 million b. $1,036.00 million c. $1,115.69 million d. $742.00 million e. $1,052.54 millionon the pro forma income statement sales are expected to increase by 23%. If the net margin is expected to increase by 18% and net profit last year was 100 million, what is the net profit projected to be? A) 118 million. B)123 million. C )158 million D) 141 million
- If sales increase from R80 000 per year to R120 000 per year, and if the operating leverage is 5, then net income should increase by: A. 167%. B. 100%. C. 334%. D. 250%.Last year Dania Corporation's sales were $525 million. If sales grow at 11.3% per year, how large (in millions) will they be 6 years later? O a. $880.95 million Ob. $998.00 million Oc. $584.33 million Od. $896.68 million Oe. $1,078.00 million2. An A firm has sales of $10 million, variable costs of $4 million, fixed expenses of $1.5 million, interest costs of $2 million, and a 30 percent average tax rate. a) Compute its DOL, DFL, and DCL. b) What will be the expected level of EBIT and net income if next year's sales rise 10 percent? c) What will be the expected level of EBIT and net income if next year's sales fall 20 percent?
- 15. CHALLENGE Walker's Gunnery, a small arms manufacturer, has current sales of $10 million and operating income (EBIT) of $450,000. The degree of operating leverage for Walker is 2.5. Next year's sales are expected to increase by 5 percent. Walker has found that, over time, the standard deviation of operating income is $300,000 and operating income is approximately normally distributed about its expected value in any year. Walker's current financial structure contains both debt and preferred stock. Interest payments total $200,000, and preferred stock dividends total $60,000. Walker's marginal tax rate is 40 percent. What is the probability that Walker's Gunnery will report negative earnings per share during the coming year? SHOW ANSWER1. You have the following information on the income statement this year: Unit sales: 1,000 price/unit: 49 VC/unit: 25 FC/year: 10,000 De[/year: 5,000 On the balance sheet last year, total asset is $20,000 and total equity is $5000. The dividend payout ration is 25%, the interest rate is 10% and the tax rate is 35%. How much interest does the firm pay? 2. You have the following information on the income statement this year: Unit sales: 1,000 Price/unit: 49 VC/unit: 25 FC/year: 10,000 Dep/year: 5,000 On the balance sheet last year, total asset is $20, 000 and total equity is $5,000. The dividend payout ratio is 25%, the interest rate is 10%, and the tax rate is 35%. What is the firm's EBITLarger Company had originally expected to earn operating income ofPhp130,000 in the coming year. Its degree of operating leverage is 2.4.Recently, larger revised its plan and now expects to increase sales by 20%next year. What is the percentage change in operating income for thecoming year? a. 8.33%b. 48.00%c. 20.00%d. 54.17%
- Last year Rocco Corporation's sales were $650 million. If sales grow at 6.0% per year, how large (in millions) will they be 8 years later? O a. $977.36 million Ob. $689.00 million O c. $1,066.33 million Od. $962.00 million O e. $1,036.00 millionThe profit margin is 15% and the dividend payout is 70%. Last year sales were RO 100 million and total assets were RO 80 Million. the accounts payable represent 30% of total assets. The operating accurals are RO 2 million. The assets and costs vary directly with sales. The firm operates at full capacity. if the sales growth rate is 10% how much external financing is needed? please show all work and interpretationSales for Green Inc. are expected to change by 16%. If Green's degree of operating leverage is 2.20, how much is Green's operating income expected to change? A В D E 1 2 3 Green's operating income is expected to change by: 4 6 7 8 9 10