Mpandu CC is a shoe business in Kavango-East that manufactures handmade waterproof sandals that is excellent in the sun. Below is one of the recent financial statements obtained from the financial manager, Mr Darius. The financial manager further informs you that he expects the quantity sold (stated below) to increase by 50%.

Crime CC

Statement of Comprehensive Income for the Year Ended December 31, 2022

Sales (1.140.00 units @ N$150.00) 171 000.00

Less: Variable Operating Cost (1,140.00 units @ N$55.00) 62 700.00

Less: Fixed Cost 14 400.00

Earnings Before Interest and Taxes (EBIT) 93 900.00

Less: Interest Paid 7.000.00

Earnings Before Taxes 86 900.00

Less: Taxes (T = 34%) 29 546.00

Earnings After Taxes 57 354.00

Less: Preference share dividends 15 000.00

Earnings Available for ordinary shareholders 42 354.00

Earnings Per Share (400 shares)105.89

Required: 

From the information provided above, you are required to compute (if the expectation of the manager are indeed realized) the Degree of Operational Leverage (DOL), Degree of Financial Leverage (DFL) and Degree of Total Leverage ( DOL)

(to the nearest four decimal places).

Answer rating: 100% (QA)

To compute the Degree of Operational Leverage DOL Degree of Financial Leverage DFL and Degree of Tot... View the full answer