Question: ( 20Markss ) Osama Inc is a successful medium sized paint manufacturer. Its current capital structure is made up of RM600,000 of 10% (annual interest)
( 20Markss ) Osama Inc is a successful medium sized paint manufacturer. Its current capital structure is made up of RM600,000 of 10% (annual interest) on Debt, and 20,000 shares of common stock. The firm pays preferred dividend of $30,000 each year and taxes at the rate of 25% a. What is Osama's EPS if the company's EBIT for the current year is $200,000 ? b. If the EBIT increase to $400,000 what is the company's EPS (5 marks) c. What is the degree of financial leverage of the company? (3 marks) d. Interpret the result (2 marks) e. What is the degree of Operating leverage if the sales level moved from 300,000 to 420,000? (3 Marks) f. Calculate the degree of total leverage and interpret the result
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