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    Harding Company manufactures skates: compute ratios and break-even point in units

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    The Harding Company manufactures skates. The company's income statement for 2001 is as follows: (See attachment)

    Given this income statement, compute the following:

    a. Degree of operating leverage.
    b. Degree of financial leverage.
    c. Degree of combined leverage.
    d. Break-even point in units (number of skates).

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    https://brainmass.com/business/financial-ratios/harding-company-manufactures-skates-compute-ratios-and-break-even-point-in-units-23089

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    Attached you will find the answer to your questions on leverage and break-ever points.

    6.
    The Harding Company manufactures skates. The company's income statement for 2001 is as follows:

    Harding Company
    Income Statement
    For the Year Ended December 31, 2001

    Sales (10,000 skates @ $50 each) $500,000
    Less: Variable costs (10,000 skates at $20) 200,000
    Fixed costs 150,000

    Earnings before interest and taxes (EBIT) 150,000
    Interest expense 60,000

    Earnings before taxes (EBT) 90,000
    Income tax expense (40%) 36,000
    Earnings after taxes (EAT)
    $ 54,000
    Given this income statement, compute the ...

    Solution Summary

    The solution discloses all the formula and calculations including the correct answers to each question.

    $2.19

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