Firm R has sales of 103,000 units at $1.98 per unit, variable operating costs of $1.69 per unit, and fixed operating costs of $6,010. Interest is $10,130 per year. Firm W has sales of 103,000 units at $2.54 per unit, variable operating costs of $0.96 per unit, and fixed operating costs of $62,500. Interest is $17,400 per year. Assume that both firms are in the 40% tax bracket.
(a) Compute the degree of operating, financial, and the total leverage for firm R.
(b) Compute the degree of operating, financial, and total leverage for firm W.
(c) Compute the relative risk of the two firms.
(d) Discuss the principles of leverage that your answers illustrate.
Answers: 3
Business, 22.06.2019 19:00
1. regarding general guidelines for the preparation of successful soups, which of the following statements is true? a. thick soups made with starchy vegetables may thin during storage. b. soups should be seasoned throughout the cooking process. c. finish a cream soup well before serving it to moderate the flavor. d. consommés take quite a long time to cool.
Answers: 2
Business, 22.06.2019 20:10
Suppose the production function in an economy is y = k0.5l0.5, where k is the amount of capital and l is the amount of labor. the economy begins with 64 units of capital and 16 units of labor. use a calculator and equations in the chapter to find a numerical answer to each of the following questions. what are the wage and the rental price of capital? the wage is equal to unit(s) of output and the rental price of capital is equal to unit(s) of output.
Answers: 1
Business, 22.06.2019 21:40
The following items could appear on a bank reconciliation: a. outstanding checks, $670. b. deposits in transit, $1,500. c. nsf check from customer, no. 548, for $175. d. bank collection of note receivable of $800, and interest of $80. e. interest earned on bank balance, $20. f. service charge, $10. g. the business credited cash for $200. the correct amount was $2,000. h. the bank incorrectly decreased the business's by $350 for a check written by another business. classify each item as (1) an addition to the book balance, (2) a subtraction from the book balance, (3) an addition to the bank balance, or (4) a subtraction from the bank balance.
Answers: 1
Firm R has sales of 103,000 units at $1.98 per unit, variable operating costs of $1.69 per unit, and...
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