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vovangra [49]
3 years ago
12

A​ 20% increase in sales causes EPS to rise from​ $4.00 to​$6.50. Assuming the firm has no​ debt, what is its degree of operatin

g leverage​ (DOL)?
A. 3.13 B. 2.25 C. 1.50 D. 1.57 E. 1.00
Business
1 answer:
Anna [14]3 years ago
5 0

Answer:

A

Explanation:

DOL =  Percentage change in EBIT / percentage change in sales

EPS = {(EBIT - Interest) × (1 - T) } / Shares

The firm has no debt, so interest would be zero

EPS = EBIT × (1 - T) / Shares.

Tax rate and number of outstanding shares remain unchanged.

Percentage Change in EPS = EBIT.

Percentage Change in EPS = (6.5 / 4) - 1 = 0.625 = 62.5%

EBIT = 62.5%

Percentage change in sales= 20%

DOL =  62.5% / 20% =  3.13

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Answer:

A 15.64%

Explanation:

300*1.18 = 354

354*0.02 = 7.08

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rate of return = 346.92/300

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3 years ago
According to _____________, as an entity separate and distinct from its owners, the corporation acts under its own name rather t
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Answer:

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3 years ago
"S Company reported net income for 2021 in the amount of $460,000. The company's financial statements also included the followin
jekas [21]

Answer:

$633,000

Explanation:

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Using this formula

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3 0
3 years ago
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Tanzania [10]

According to the utilitarian principle, one should "choose the option that offers the greatest good for the greatest number of people."

-Hope this helps.
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Answer:

C. Monopoly

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