Using the financial statements presented in problem 12, determine Global Manufacturing’s degree of operating leverage in each of the years presented. Assume the cost of goods sold are variable costs and all other costs are fixed.
Answer to relevant QuestionsUsing your estimate for the degree of operating leverage for Global in 2015, estimate the level of operating income if the following year’s sales a) rise by 5 percent; b) fall by 12 percent. How does the choice of level or seasonal production affect a firm’s cash over the course of a year? What is float? Why is it important to cash management? What is credit analysis? Identify the five C’s of credit analysis. Pretty Lady Cosmetic Products has an average production process time of 40 days. Finished goods are kept on hand for an average of 15 days before they are sold. Accounts receivable are outstanding an average of 35 days, and ...
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