STERLING TI… Show more The Sterling Tire Company’s incom

Assignment Help Finance STERLING TI… Show more The Sterling Tire Company’s incom

Finance

STERLING TI… Show more The Sterling Tire Company’s incom

STERLING TI… Show more The Sterling Tire Company’s income statement for 2010 is as follows: STERLING TIRE COMPANY STERLING TIRE COMPANY Income Statement Income Statement For the Year Ended December 31, 2010 For the Year Ended December 31, 2010 Sales (23,000 tires at $66 each) $ 1,518,000 Less: Variable costs (23,000 tires at $33) 759,000 Fixed costs 430,000 Earnings before interest and taxes (EBIT) 329,000 Interest expense 51,500 Earnings before taxes (EBT) 277,500 Income tax expense (30%) 83,250 Earnings after taxes (EAT) $ 194,250 (a) Compute the degree of operating leverage. (Enter only numeric value rounded to 2 decimal places.) Degree of operating leverage (b) Compute the degree of financial leverage. (Enter only numeric value rounded to 2 decimal places.) Degree of financial leverage (c) Compute the degree of combined leverage. (Enter only numeric value rounded to 2 decimal places.) Degree of combined leverage (d) Compute the break-even point in units. (Enter only numeric value rounded to nearest whole number.) Break-even point units • Show less

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