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Problem 3 Use the following income statement to complete this problem. (PLEASE SHOW YOUR WORK)....

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Accounting

Problem 3 Use the following income statement to complete this problem. (PLEASE SHOW YOUR WORK). Income Statement For the year ended 12/31/2017 Sales $575,000 Total Variable Costs 260,000 Fixed costs 94,000 EBIT 221,000 Interest 19,500 EBT 201,500 Taxes (35%) 70,525 Net income 130,975 Shares outstanding 20,000 EPS $6.55

a) Calculate the Degree of Operating Leverage (DOL) and provide an interpretation of your finding.

b) Calculate the Degree of Financial Leverage (DFL) and provide an interpretation of your finding.

c) Calculate the Degree of Combined Leverage (DCL) and provide an interpretation of your finding. .

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