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It is December 31. Last year, Campbell Construction had sales of $120,000,000, and it forecasts that...

It is December 31. Last year, Campbell Construction had sales of $120,000,000, and it forecasts that next year’s sales will be $114,000,000. Its fixed costs have been—and are expected to continue to be—$60,000,000, and its variable cost ratio is 21.00%. Campbell’s capital structure consists of a $15 million bank loan, on which it pays an interest rate of 8%, and 750,000 shares of common equity. The company’s profits are taxed at a marginal rate of 40%. Given this data, complete the following sentences: Note: For these computations, round each EPS to two decimal places.

• The company’s percentage change in EBIT is . -12.26% -13.62% -16.34%

• The percentage change in Campbell’s earnings per share (EPS) is . -11.28% -14.10% -19.74%

• The degree of financial leverage (DFL) at $114,000,000 is . 0.97 1.04 2.82

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SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

jeff jeffy answered 2 years ago
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