Demonstrate the importance of leverage analysis and how operating leverage, financial leverage, and combined leverage...
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Accounting
Demonstrate the importance of leverage analysis and how operating leverage, financial leverage, and combined leverage are calculated.
Exercise 9: Leverage calculations Sales volume 100,000 units Price per unit $ 11.30 Variable costs (per unit) $ 8.30 Fixed costs $100,000 Interest $ 25,000 Corporate income tax rate 40%Use the information above to calculate the companys operating leverage, financial leverage, and combined leverage.
Operating leverage: Financial leverage: Combined leverage
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