Ensured Insurance has a degree of financial leverage (DFL) equal to 4.0 and a degree of total
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Ensured Insurance has a degree of financial leverage (DFL) equal to 4.0 and a degree of total leverage (DTL) equal to 10.0. Ensured expects sales to be $600,000 this year, and its net profit margin is 8 percent.
(a) What is Ensured’s degree of operating leverage (DOL)?
(b) If Ensured’s sales turn out to be 7 percent higher than expected, what will its net income be?
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DFL 40 DTL 100 Sales 600000 Profit margin 8 a DTL DO...View the full answer
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