What is American Airlines' degree of operating leverage? 2. What is the degree of financial leverage? 3.
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Question:
What is American Airlines' degree of operating leverage?
2. What is the degree of financial leverage?
3. What is the degree of combined leverage?
4. Is leverage good or bad?
CFO MEETING NOTES:
TICKETS SOLD YTD: 10,000,000 AIRLINE TICKETS
YTD TOTALS ($MM) | |
SALES | 6,215 |
FIXED COSTS | 2,161 |
TOTAL VARIABLE COSTS | 1,508 |
EBIT | 2,546 |
INTEREST EXPENSE | 554 |
BREAK-EVEN ANALYSIS:
DOLLARS | |
FIXED COSTS | $1,575,000,000 |
PRICE PER UNIT | $627 |
VARIABLE COST PER UNIT | $213 |
GRAPH:
FORMULAS:
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