Following data is related to company A and B. Company A Company B EBIT...
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Accounting
Following data is related to company A and B.
Company A Company B
EBIT 50,000 62,000
Fixed Cost 10,000 33,000
Variable Cost 20,000 12,000
Interest Cost 7,000 15,000
Preferred Dividends 5,000 8,000
Tax rate 30 % 30 %
What is degree of operating leverage and degree of financial leverage for both firms. Interpret your answer also. What will be degree of total leverage for both firms? Interpret your answer.
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