Van Auken Lumber’s annual income statement. Van Auken Lumber: Income Statement for December 31, 20xx ($ thousand) Sales $36,000 Cost of Goods Sold (25,200) Gross Profit $10,800 Fixed Operating costs (6,480) EBIT $4,320 Interests (2,880) Earnings before taxes $1,440 Taxes (40%) (576) Net Income $864 Dividends (50%) $432 Using this information, answer the following questions:

Compute the degree of operating leverage (DOL), degree of financial leverage (DFL), and degree of total leverage (DTL) for Van Auken Lumber.

Interpret the meaning of each of the numerical values you computed.

Briefly discuss some ways that Van Auken can reduce its degree of total leverage.

What is the breakeven point of the firm? (How are you finding the Price per Unit and Units Sold from the Income statement)*****

Discuss the ways to reduce the financial risk and business risks of the firm.

Answer rating: 100% (QA)

Answer Step by Step Explanation Gross profit S10800 DOL 25 x 3D BIT 4320 EBIT ... View the full answer