A 10% change in a firm's revenues is likely to result in a change of more than 10% in the firm's operating income because?

Related BrainMass Solutions

• Operating leverage,equity beta & cost structures

  What is the percent change in operating income if revenues change from $2 million to $1 million? b.

• Operating Leverage and Fluctuations in operating earnings

  Jason estimates that after initiating his changes in the company's operations the firm's cost of goods sold are 55% of firm revenues and operating expenses are equal to a fixed compnonent of $350,000 plus a variable cost component equal to 10% of revenues

• Practice exam problems

  These are expenses that did not result in a change to operating cash flows so you add back to net income in getting to operating cash flow. Pick A. 6.

• Analyzing Hasbro, Inc Financial Statements

  because it does not reflect the change in working capital d) Is a means of window dressing the operating margin (i.e. make it look better) 6) EBITDA consists of: a) Operating profit less depreciation and amortization b) Net income plus depreciation

• Schweser Satelites Inc. produces satellite earth stations that sell for $100,000 each.

  1,350,000 - 500,000=850,000 increase in net income, because the tax rate is zero.

• Hasbro: Calculate various ratios and then analyze results.

  look better) c) Is not a good substitute for cash from operations because it does not reflect the change in working capital d) Is a proxy for cash from operations and its direct comparison is to operating profit EBITDA consists of: a) Operating

• Finance Questions

  Taking half of the simple annual rate. 7. Why is a change in required yield for preferred stock likely to have a greater impact on price than a change in required yield for bonds?

• Finance-related Problem Solving

  Changing to net 45 days will likely a. Decrease the firm's AR turnover b. Decrease the firm's average AR balance c. Decrease the firm's bad debt expense d. None of the above e. More than one of the above (of A, B, C) 13.

• Cont Marg Inc Stmt and Sens Analysis

  Requirement 4: Refer to your answer to requirement 1 when total revenues were $160,000. (a) Calculate the firm's operating income (or loss) if unit selling price and variable expenses do not change, and total revenues increase by $18,000.