You have the following income statement for your corporation. It represents the most recent year's...
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Accounting
You have the following income statement for your corporation. It represents the most recent year's operations, which ended yesterday. Sales (10,000 units @ . 20 per unit) 200,000 100,000 Variable costs (10,000 units @ 10 per unit) Contribution margin Fixed costs (including Rs 20,000 annual depreciation) 100,000 50,000 EBIT 50,000 Interest expense 10,000 EBT 40,000 Taxes @ 50% . 20,000 Net income 20,000 Preferred dividend 10,000 Net income to equity holders 10,000 Your boss tells you to answer to the following questions: (0) What is the firm's break-even point? (ii) What is the firm's cash break-even point? (111) What is the degree of operating leverage, degree of financial leverage and degree of total leverage? (iv) If sales should increase by 10 percent, by what percent would net income increase? (6) What is the financial break-even point for the firm
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