Solution-What is the degree of financial leverage

What is the degree of financial leverage

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Problem 1: B Company's contribution margin is P45,000 at sales of P150,000. If the degree of operating leverage is 6, what is the degree of financial leverage if the interest expense is P2,000 and preference dividends declared is P1,500. Tax rate is 30%

Problem 2: Company is planning to produce two products, AA and ZZ. Company is planning to sell 120,000 units of AA at P4 a unit and 200,000 units of ZZ at P3 a unit. Variable costs are 70% of sales for AA and 80% of sales for ZZ. In order to realize a profit of P160,000, total fixed cost would be.

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What is the degree of financial leverage

Reference no: EM132791084

Reference no: EM132791084

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