Leverages - Problem Set Problem Question 1 Use the income statement of ABC Company below to answer the following questions. All amounts are in thousands of Dirhams. 750 300 450 200 250 Sales (50,000 units at 15) Variable costs (50,000 units at 6) Contribution margin Fixed costs EBIT Interest EBT Tax (10%) EAT Number of shares outstanding EPS 100 150 135 20.000 6.75 1. Calculate the degree of operating leverage. Explain what your answer means, 2. Calculate the degree of financial leverage. Explain what your answer means. 3. Calculate the degree of combined leverage. Use the answers from questions 1-3 to help you answer questions 4-7. 4. If the sales volume increased by 10% by how much would the EBIT increase? Give your answer in percentage and in Dirhams. 5. If the sales volume increased by 5% by how much would EPS increase? Give your answer in percentage and in Dirhams. 6. If the EBIT increased by 20%, by how much would EPS increase? Give you answer in percentage and Dirhams 7. The sales manager would like to increase net income by 30%. What percentage change in sales is required to achieve this goal