0
If a firm has no operating leverage and no financial leverage then a 10 percent increase in sales will have what effect on EPS?
Wiki User
∙ 12y ago
It will inrease by 10%
Wiki User
∙ 12y ago
Add your answer:
Earn +20 pts
A pickup truck that sold four 18722 dollars sells for 32270 dollars what is the percent increase?
The increase is 72.364%.
What percent of your income should be allotted to savings?
Saving is the key to financial stability. Therefore it is goodÊto saveÊat least 10 percent of your Êmonthly income.Ê
What is a 500 percent increase?
It means 5 times more than at the beginning
Financial experts advise you will need approximately of your pre-retirement income in order to maintain your standard of living after you retire?
80 percent
Financial experts advise you will need approximately of your pre-retirement income in order to maintain your standard of living after you retire.?
80 percent
If the degree of operating leverage is 4 then one percent change in quantity sold should result in four percent change in?
If the degree of operating leverage is 4 then one percent change in quantity sold should result in four percent change in the net operating income. The calculation for degree of operating leverage are total contribution margin divided by net operating income.
What is meabt by operating leverage?
- It measures the EBIT's percentage change as a result of a change of one percent in the level of output. - It helps in measuring the business risk.
Is it a 800 percent increase or an 800 percent increase?
An 800 percent increase.
What is the percent of increase from 10 percent to 14 percent?
The percent of increase is 40%
What percent increase is 90 percent to 98 percent?
It is an increase of 8.88... percent (also an increase of 8 percentage points).
What is the percent increase between 59 percent and 94 percent?
The percent increase from 59 percent to 94 percent is 59.322%
Is it 2.5 percent leverage ration is good for food stuff company?
Yes
What is the percent increase from 20 to 39?
95 percent increase.
Percent increase from 120 to 150?
25 percent increase.
What is a percent change describing an increase in a quantity?
Percent Increase
How much percent increase or How many percent increase?
many.
What is the meaning of operating leverage describe it?
Operating leverage is the degree to which cost within a company is fixed. Fixed costs are costs that do not vary with sales. For example, the salary of a manager on a contract is fixed; that is regardless of the production level of a company the manager's pay would not change. Another example is rent, regardless of how much items are sold the rent for a store does not change. With this said, a company with a high operating leverage (in other words high fixed cost) have a high risk because it magnifies the effects of profit depending on sales. This could be measured by computing the degree of operating leverage (DOL) which is the percentage change in profit given a 1 percent change in sales.An example from my Finance textbook (Fundamentals of Corporate Finance) shows a nice table that compares a high fixed cost company (high operating leverage) with a high variable cost company (low operating leverage) given different states of sales. So the following table is a replication of that table and not my own.High Fixed Cost (High Operating Leverage)High Variable Cost(Low Operating Leverage)Sales:SlumpNormalBoomSlumpNormalBoomSales130001600019000130001600019000- VC105631300015438109201344015960- FC200020002000156015601560- Dep.450450450450450450= Profit-135501112705501030VC = variable cost; FC = fixed cost; Dep = deprecation; Profit = before taxAs you can see that with a high operating leverage, the changes from a $3000 change in sales is more than the change from a company with a low operating leverage. This could be captured through DOL as well.DOL = (% change in profits) / (% change in sales)Where % change = (New value - old value) / (old value)If we look at the normal to boom situations:For the high fixed cost the percentage change in profits is 102.20% and the percentage change in sales is 18.75% DOL is as followed:DOL = 102.20/ 18.75 = 5.45For the high variable company the percentage change in profits is 87.30% and the percentage change in sales is 18.75% DOL is as followed:DOL = 87.30/ 18.75 = 4.65Thus the higher the DOL the more fixed cost a company has and the more risk it assumes if the sales slump. But it also means that when sales boom, the higher operating leveraged company will profit merrily!
