newstudent1
Jun 13, 2008, 04:22 PM
I must be missing something, how would I determine the total sales with this information?
My questions involve calculating the degree of operation leverage, the degree of financial leverage, and the degree of combined leverage and how to interpret this value. I for one can not understand how to find the sales to complete the formula to solve the problem.
This is the information we are given.
Fixed operating costs = $5.8 Million
Variable cost ratio = 0.20
Bonds outstanding = $2 Million with a coupon rate of 8%.
Shares of preferred stock = 30,000, pays a $2 annual dividend
Shares outstanding of common stock = 100,000 shares
Revenues = $8 Million
Tax bracket = 40%
Is the sales the $8 Million? Or what?
What ever help I can get I would appreciate
Thanks.:confused:
My questions involve calculating the degree of operation leverage, the degree of financial leverage, and the degree of combined leverage and how to interpret this value. I for one can not understand how to find the sales to complete the formula to solve the problem.
This is the information we are given.
Fixed operating costs = $5.8 Million
Variable cost ratio = 0.20
Bonds outstanding = $2 Million with a coupon rate of 8%.
Shares of preferred stock = 30,000, pays a $2 annual dividend
Shares outstanding of common stock = 100,000 shares
Revenues = $8 Million
Tax bracket = 40%
Is the sales the $8 Million? Or what?
What ever help I can get I would appreciate
Thanks.:confused: