Compute its degree of financial leverage use 2012s dfl to

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A corporation with 800,000 shares of common stock outstanding earned $1.6 million in operating income (EBIT) during 2012. It also paid $1.2 million in interest and $200,000 in taxes in 2012. (a) Calculate its degree of financial leverage. (b) Use 2012's DFL to forecast 2013 EPS if pro forma EBIT for 2012 is $3.6 million. (assume interest paid and shares of common outstanding remain unchanged) Show your work and explain your calculations. 

Reference no: EM13476967

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