Homework 7B
Question 1 1
/ 1 point
Irresistible Chips is reviewing its financial condition. The
firm generated an operating profit of $4,602,260. The firm’s interest expense
was $2,021,200.
What is the firm’s
degree of financial leverage? Round the answer to two decimals
Question 2 1
/ 1 point
Irresistible Chips is reviewing its financial condition. The
firm generated an operating profit of $5,699,130. The firm’s interest expense
was $2,593,350.
What will be the resulting percentage change in earnings per
share if they expect operating profit to change 2.6 percent?
(You should calculate the degree of financial leverage
first).
(Write the percentage sign in the “units” box).
Round the answer to two decimals
Question 3 1
/ 1 point
Use the following information about Rat Race Home Security,
Inc. to answer the questions:
Average selling price per unit $346.
Variable cost per unit $192
Units sold 352
Fixed costs $6,393
Interest expense $13,881
Based on the data
above, what is the degree of financial leverage of Rat Race Home Security,
Inc.?
Question 4 1
/ 1 point
Use the following information about Rat Race Home Security,
Inc. to answer the questions:
Average selling price per unit $336.
Variable cost per unit $200
Units sold 423
Fixed costs $9,477
Interest expense 18,461
Based on the data
above, what will be the resulting percentage change in earnings per share of
Rat Race Home Security, Inc. if they expect operating profit to change -1.5
percent?
(You should calculate the degree of financial leverage
first).
(Write the percentage sign in the “units” box).
Round the answer to two decimals
