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What is Ensured degree of operating leverage

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Reference no: EM132698983

Problem - Ensured Insurance has a degree of financial leverage (DFL) equal to 4.0 and a degree of total leverage (DTL) equal to 10.0. Ensured expects sales to be $600,000 this year, and its net profit margin is 8 percent.

Required -

(a) What is Ensured's degree of operating leverage (DOL)?

(b) If Ensured's sales turn out to be 7 percent higher than expected, what will its net income be? Ensured has no preferred stock.

Reference no: EM132698983

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