FREE Trial

The Sterling Tire Company's income statement for 20X1 is as follows: Given this income statement, compute the following: a. Degree

Question:

The Sterling Tire Company's income statement for 20X1 is as follows:

STERLING TIRE COMPANY Income Statement For the Year Ended December 31, 20X1 Sales (20,000 tires at $60

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.

Transcribed Image Text:

STERLING TIRE COMPANY Income Statement For the Year Ended December 31, 20X1 Sales (20,000 tires at $60 each)... Less: Variable costs (20,000 tires at $30). Fixed costs Earnings before interest and taxes (EBIT).. Interest expense.. Earnings before taxes (EBT). Income tax expense (30%). Earnings after taxes (EAT).. $1,200,000 600,000 400,000 200,000 50,000 150,000 45,000 $ 105,000

This problem has been solved!


Do you need an answer to a question different from the above? Ask your question!

Step by Step Answer:

Answer rating: 100% (1 review)

Q 20 000 P 60 VC 30 FC 400 000 I 50 …View the full answer


answer-question
Answered By
tutor-profile-image
Rodrigo Louie Rey
I started tutoring in college and have been doing it for about eight years now. I enjoy it because I love to help others learn and expand their understanding of the world. I thoroughly enjoy the "ah-ha" moments that my students have. Interests I enjoy hiking, kayaking, and spending time with my family and friends. Ideal Study Location I prefer to tutor in a quiet place so that my students can focus on what they are learning.
5.00+ 1+ Reviews 10+ Question Solved
Related Book For  answer-question
Foundations Of Financial Management

Foundations Of Financial Management

ISBN: 9781264097623

18th Edition

Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen

See More Books
Question Details
Chapter # 5- Operating and Financial Leverage
Section: Problem
Problem: 10
View Solution
Create a free account to access the answer
Cannot find your solution?
Post a FREE question now and get an answer within minutes. * Average response time.
Question Posted: September 28, 2023 03:58:20
See More Questions

Students also viewed these Business questions

Q:
Problem / Issue (Government imposed barriers to entry into the Cannabis) 1 Describe problem/issue 2 Why this is a problem 3 The root cause of the problem
A:
1 The government has imposed barriers to entry into the Cannabis industry such......
Q:
The Harding Company manufactures skates. The company's income statement for 20X1 is as follows: HARDING COMPANY Income Statement For the Year Ended December 31, 20X1 Sales (10,500 skates @ $60...
A:
Harding Company Q 10 500 P 60 VC 25 FC......
Q:
Suppose the total cost in dollars of manufacturing q units is C(q) = 3q 2 + q + 500. a. Use marginal analysis to estimate the cost of manufacturing the 41st unit. b. Compute the actual cost of...
A:
C q 3q 2......
Q:
An asset purchased by Stratasys, Inc. had a first cost of $70,000 with an expected salvage value of $10,000 at the end of its 5-year life. In year 2, the revenue was $490,000 with operating expenses...
A:
Click to View...
Q:
The data show the number of points the winning team scored in the Rose Bowl. Find the mean and modal class for the data. Class Frequency 1420 10 2127 11 2834 6 3541 8 4248 4 4955 1
A:
Class Limits Boundaries X m f f X m 14 20 13 5......
Q:
Some French cafs are not recommended. (F, C, R) Translate the following statements into symbolic form. Avoid negation signs preceding quantifiers. The predicate letters are given in parentheses.
A:
To translate the statement Some French cafs are not recommended into symbo......
Q:
Tattle Company engaged in the following transactions in October 2010: Oct. 7 Sold merchandise on credit to Lina Ortiz, terms n/30, FOB shipping point, $6,000 (cost, $3,600). 8 Purchased merchandise...
A:
1 Transactions recorded 2010 Oct 7 Accounts Receivable 6 000 Sales 6 000 Sold merchandise to Lina Or......
Q:
A 6-year lease states that the annual rent for office space is Php 84,000 the first year and will increase by 8% each additional year of the lease. What will the total rent expense be for the 6-year...
A:
To calculate the total rent expense for the 6 year lease you can use the formula for the sum of an a......
Q:
Calloway Cab Company determines its break-even strictly on the basis of cash expenditures related to fixed costs. Its total fixed costs are $530,000, but 5 percent of this value is represented by...
A:
Cash related fixed costs......
Q:
The Hartnett Corporation manufactures baseball bats with Babe Ruths autograph stamped on them. Each bat sells for $35 and has a variable cost of $19. There are $31,200 in fixed costs involved in the...
A:
a b BE......
Q:
On January 1, 2010, the Pitt Company sold a patent to Chatham, Inc., which had a carrying value on Pitts books of $10,000. Chatham gave Pitt a $60,000 non-interest-bearing note payable in five equal...
A:
PITT COMPANY Income Before Income Taxes on Sale of Patent F......
Q:
Goal: The goal of this part of the project is to implement in Java or Python, a Tokenizer for the Core language. Although it is called a tokenizer, as we saw in class, what you will implement is a...
A:
Answer import java io public class Scanner private BufferedReader reader private String tokens priva......
Q:
Write a short report describing and reviewing any one of the below-listed new Oracle database security features. The report should cover a comprehensive summary on the selected feature, its impact on...
A:
Title Review of Oracle Audit Vault Introduction Oracle Audit Vault is a comprehensive security solution designed to enhance the security of Oracle databases by providing centralized auditing and monit......
Q:
Your friend George Monroe has been left money by his uncle and has the opportunity to purchase 100% of the shares in a private company Deli Foods Pty Ltd. which supplies food ingredients to local...
A:
Analyzing the accounts of Deli Foods Pty Ltd over the past three years is an essential step in evaluating whether it s a good buy for your friend George Monroe Here are some key steps and consideratio......
Q:
In this discussion board post, you will analyze how Zero Trust can help protect against malicious behavior and malware attacks. Please analyze and discuss the following: The Zero Trust model is built...
A:
In this discussion board post you will analyze how Zero Trust can help protect against malicious behaviour and malware attacks Please analyze and discuss the following The Zero Trust model is built up......
Q:
There is a European call option on the stock of TSLA with a strike price of $900. The cost of the option today is $2.56 (recall that 1 option contract is for 100 shares). If you buy the option today...
A:
European Call Option on TSLA Buy the option today and wait until expiration TSLA 1000 at expiration......
Q:
The analysis of shafts for a compressor is summarized by conformance to specifications:
A:
a 3......
Q:
Using Apple, demonstrate how the differentiation strategy can be well implemented.
A:
Apple is an American corporation that designs manufactures and sells personal computers computer hardware and software The company is well known for i......
Mastering C# Database Programming 1st Edition - ISBN: 0782141838 - Free Book