Percentage increase before EBIT
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A company has annual sales of $14,000. Its variable costs equal 60% of its sales, fixed costs equal $1,000. If the company's sales increase 10%, what will be the percentage increase in the company's earnings before interest and taxes (EBIT)?
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Solution Summary
The solution explains how to determine the percentage increase before EBIT.
Solution Preview
This can be calculated by finding out the degree of operating leverage (DOL). DOL gives the percentage change in EBIT given a percentage change in ...
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