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Increase in operating income/net income

4. How much will a 15% increase in sales increase a firm's net operating income (NOI) and increase its net income (NI), if:
(a) its degree of operating leverage (DOL) = 2.0, and its
(b) degree of financial leverage (DFL) = 3.0? (b) its
(c) DOL = 1.5 and DFL = 2.0?

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(a) DOL = 2.0 and DFL = 3.0
The NOI changes by the DOL and the NI changes by Degree of Total ...

Solution Summary

The solution explains how to calculate the increase in operating income and net income given the DOL and DFL