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Following data is related to company A and B. Company A Company B EBIT...

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Accounting

Following data is related to company A and B.

Company A Company B

EBIT 50,000 62,000

Fixed Cost 10,000 33,000

Variable Cost 20,000 12,000

Interest Cost 7,000 15,000

Preferred Dividends 5,000 8,000

Tax rate 30 % 30 %

What is degree of operating leverage and degree of financial leverage for both firms. Interpret your answer also. What will be degree of total leverage for both firms? Interpret your answer.

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