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You have been provided the income statements for the following companies. ...

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Accounting

You have been provided the income statements for the following companies.

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a. Calculate the degree of operating leverage for each company.

b. Calculate the degree of financial leverage for each company.

c. Calculate the degree of total or combined leverage for each company.

d. Which company is riskier? Explain!

Company Company Sales Cost of Goods Sold Contribution Margin Fixed Operating Costs ariable Operating Costs Depreciation EBIT Interest EBT Taxes @ 40% EAT (Net Income) Shares o/s EPS 25.00 3.00 22.00 3.00 4.00 2.00 13.00 1.50 11.50 4.60 6.90 13.80 0.50 27.00 4.00 23.00 3.00 4.00 2.00 14.00 1.00 13.00 5.20 7.80 15.60 0.50

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