Please see this empty income statement from Spuds and Suds for FY 2020. Calculate the degree of financial leverage if price per units is 17.00. Please give your answer rounded to two decimal places. Your Answer: Answer 2 Income Statement 3 For the Year Ended Dec 31, 2020 4 2020 2021 5 Sales $ 2,500,000 $2,750,000 6 Less: Variable Costs $ 1,500,000 $1,650,000 7 Less: Fixed Costs $ 400,000 $400,000 8 Earnings Before Interest and Taxes 5 600.000 $ 700,000 9 Less: Interest Expense $ 100,000 $ 100,000 10 Earnings Before Taxes $ 500,000 $ 600,000 11 Taxes $ 125.000 $150,000 12 Net Income $ 375,000 $450,000 13 14 Less: Preferred Dividends $ 100.000 $ 100.000 15 Net Income Available to Common $ 275,000 $ 350,000 16 Common Shares Outstanding 1,000,000 1,000,000 17 Earnings per Share $ 0.28 $ 0.35 18 19 Assumptions 20 Price per Unit $ 16.00 $ 16.00 21 Unit Sales 156.250 171,875 22 Target EBIT $ 800,000 $ 800,000 23 Variable Costs as a Percent of Sales 60% 60% 24 Projected Sales Growth 10% 25 Tax Rate 25% 25% 26 27 Operating Break-even Point (Units) 62,500 62,500 28 Operating Break-even Point (Dollars) 1,000,000 1,000,000 29 30 Units to Meet EBIT Target 187,500 31 32 % Change in Sales from Prior Year 10.00% 33 % Change in EBIT from Prior Year 16.67% 34 % Change in EPS from Prior Year 35 36 Degree of Operating Leverage 1.67 1.57 37 Degree of Financial Leverage 38 Degree of Combined Leverage 39