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geniusboy [140]
4 years ago
5

You are the manager of a project that has an operating leverage rating of 2.8 and a required return of 14 percent. Due to the cu

rrent state of the economy, he expects sales to decrease by 7 percent next year. What change should you expect in operating cash flows next year given your sales forecast?
Business
1 answer:
slava [35]4 years ago
8 0

Answer:

The change should you expect in operating cash flows next year would be 19.60%

Explanation:

In order to calculate the change should you expect in operating cash flows next year given your sales forecast we would have to make the following calculation:

change should you expect in operating cash flows=operating leverage rating*percentage of decrease sales next year

change should you expect in operating cash flows=2.8*0.07

change should you expect in operating cash flows=19.60%

The change should you expect in operating cash flows next year would be 19.60%

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