Question: Below is the current question. The one below that with answers is the sample of what is asked for this entire question. It represents the
Below is the current question. The one below that with answers is the sample of what is asked for this entire question.

It represents the most recent year's operations, which ended yesterday (Leverage and EPS) You have developed the following pro forma income statement for your corporation: Your supervisor in the controller's office has just handed you a memorandum asking for written responses to the following questions a. If sales should increase by 30 percent, by what percent would earnings before interest and taxes and net income increase? b. If sales should decrease by 30 percent, by what percent would earnings before interest and taxes and net income decrease? c. If the firm were to reduce its reliance on debt financing such that interest expense were cut in half, how would this affect your answers to parts a and b? a. If sales should increase by 30%, the percentage change in earnings before interest and taxes is %. (Round to two decimal places.) Data Table Sales Variable costs Revenue before fixed costs Fixed costs EBIT Interest expense Earnings before taxes Taxes (50%) Net income 45,783,000 22,823,000 22,960,000 ,289,000 13,671,000 1,362,000 S12,309,000 6,154,500 6,154,500 Print Done
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
