Question
In: Finance
Sinclair Manufacturing and Boswell Brothers Inc. are both involved in the production of brick for the...
Sinclair Manufacturing and Boswell Brothers Inc. are both involved in the production of brick for the homebuilding industry. Their financial information is as follows: Sinclair Boswell Capital Structure Debt @ 11% $ 1,080,000 0 Common stock, $10 per share 720,000 $ 1,800,000 Total $ 1,800,000 $ 1,800,000 Common shares 72,000 180,000 Operating Plan: Sales (58,000 units at $20 each) $ 1,160,000 $ 1,160,000 Variable costs 928,000 580,000 Fixed costs 0 308,000 Earnings before interest and taxes (EBIT) $ 232,000 $ 272,000 The variable costs for Sinclair are $16 per unit compared to $10 per unit for Boswell. a. If you combine Sinclair’s capital structure with Boswell’s operating plan, what is the degree of combined leverage? (Round your answer to 2 decimal places.) b. If you combine Boswell’s capital structure with Sinclair’s operating plan, what is the degree of combined leverage? (Round your answer to the nearest whole number.) c. In part b, if sales double, by what percentage will earnings per share (EPS) increase? (Round your answer to the nearest whole percent.)
Solutions
jeff jeffy answered 1 year agoRelated Solutions
Sinclair Manufacturing and Boswell Brothers Inc. are both involved in the production of brick for the...
Sinclair Manufacturing and Boswell Brothers Inc. are both
involved in the production of brick for the homebuilding industry.
Their financial information is as follows:
Sinclair
Boswell
Capital
Structure
Debt @ 10%
$
1,920,000
0
Common stock, $10 per share
1,280,000
$
3,200,000
Total
$
3,200,000
$
3,200,000
Common shares
128,000
320,000
Operating
Plan:
Sales (72,000 units at $15
each)
$
1,080,000
$
1,080,000
Variable costs
864,000
432,000
Fixed costs
0
322,000
Earnings before interest and
taxes (EBIT)
$
216,000
$...
Sinclair Manufacturing and Boswell Brothers Inc. are both involved in the production of brick for the...
Sinclair Manufacturing and Boswell Brothers Inc. are both
involved in the production of brick for the homebuilding industry.
Their financial information is as follows:
Sinclair
Boswell
Capital
Structure
Debt @ 10%
$
1,740,000
0
Common stock, $10 per share
1,160,000
$
2,900,000
Total
$
2,900,000
$
2,900,000
Common shares
116,000
290,000
Operating
Plan:
Sales (69,000 units at $15
each)
$
1,035,000
$
1,035,000
Variable costs
828,000
414,000
Fixed costs
0
319,000
Earnings before interest and
taxes (EBIT)
$
207,000
$...
Sinclair Manufacturing and Boswell Brothers Inc. are both involved in the production of brick for the...
Sinclair Manufacturing and Boswell Brothers Inc. are both
involved in the production of brick for the homebuilding industry.
Their financial information is as follows: Sinclair BoswellCapital
Structure Debt @ 10%$2,100,000 0Common
stock, $10 per share 1,400,000 $3,500,000Total$3,500,000
$3,500,000Common shares
140,000 350,000 Operating
Plan: Sales (75,000 units at $15
each)$1,125,000 $1,125,000Variable costs
900,000 450,000Fixed costs 0 325,000Earnings
before interest and taxes (EBIT)$225,000 $350,000 The variable
costs for Sinclair are $12 per unit compared to $6 per unit for
Boswell. a. If you combine Sinclair’s capital structure with
Boswell’s...
Sinclair Manufacturing and Boswell Brothers Inc. are both involved in the production of brick for the...
Sinclair Manufacturing and Boswell Brothers Inc. are both
involved in the production of brick for the homebuilding industry.
Their financial information is as follows:
Sinclair
Boswell
Capital Structure
Debt @ 12%
$
1,320,000
0
Common stock, $10 per share
880,000
$
2,200,000
Total
$
2,200,000
$
2,200,000
Common shares
88,000
220,000
Operating Plan:
Sales (62,000 units at $25 each)
$
1,550,000
$
1,550,000
Variable costs
1,116,000
744,000
Fixed costs
0
312,000
Earnings before interest and taxes (EBIT)
$
434,000
$...
Sinclair Manufacturing and Boswell Brothers Inc. are both involved in the production of tile for the...
Sinclair Manufacturing and Boswell Brothers Inc. are both
involved in the production of tile for the home-building industry.
Their financial information is as follows:
Capital Structure
Sinclair
Boswell
Debt @ 12%
$1,320,000
0
Common stock, $10 per share
880,000
$2,200,000
$2,200,000
$2,200,000
Common shares
88,000
220,000
Operating Plan
Sales (62,000 units at $25 each)
$1,550,000
$1,550,000
Less: Variable costs
1,116,000
744,000
($18 per unit)
($12 per unit) ...
A company is manufacturing building bricks and fire bricks. Both production require two processes. Brick forming...
A company is manufacturing building bricks and fire bricks. Both
production require two processes. Brick forming and Heat treatment.
The requirements for the two bricks are:
Building Bricks
Fire Bricks
Forming per 100 bricks
3 hours
2 hours
Heating treatment per 100 bricks
2 hours
5 hours
Total cost of the two departments in one months were:
Forming
$ 21 200
Heat treatment
$ 48 800
Units produced during the month was:
130 000
70 000
Require:
Prepare statement of...
Wyatt Inc., a multinational manufacturing firm involved in production of architectural millwork like custom molding, panels,...
Wyatt Inc., a multinational manufacturing firm involved in
production of architectural millwork like custom molding, panels,
book cases and others. Suppose that the Wyatt Inc. is involved in
the production of the molding and it is expected to maintain same
inventory at the end of the year as at the beginning of the year.
Let us suppose the estimated fixed cost is $288, 000, and the
estimated variable costs per unit are $14. Also assume that 60,000
units will be...
Wyatt Inc., a multinational manufacturing firm involved in production of architectural millwork like custom molding, panels,...
Wyatt Inc., a multinational manufacturing firm involved in
production of architectural millwork like custom molding, panels,
book cases and others. Suppose that the Wyatt Inc. is involved in
the production of the molding and it is expected to maintain same
inventory at the end of the year as at the beginning of the year.
Let us suppose the estimated fixed cost is $288, 000, and the
estimated variable costs per unit are $14. Also assume that 60,000
units will be...
JD Marcus Inc. is a manufacturing company that has two production divisions. Both divisions report their...
JD Marcus Inc. is a manufacturing company that has two
production divisions. Both divisions report their costs to the
Sales division, which is considered the profit center of the
company. Information for the following divisions is as follows:
Division A Division B Product Sales Price: $35/unit $20/unit Direct
Labor: $17/unit $5/unit Direct Materials: $5/unit $2/unit Variable
Overhead: $10/unit $10/unit Traceable Fixed Costs: $20,000 $40,000
Common Fixed Costs: $5,000 $15,000 Total units sold: 10,000 units
20,000 units Which division had the...
Scott Brothers Company (SBC) is contemplating the production of a new type of hand-held manufacturing device....
Scott Brothers Company (SBC) is
contemplating the production of a new type of hand-held
manufacturing device. A consultant was paid $15,000 last year to
perform a feasibility study for this new device. The firm has an
existing facility they can use for this potential project, but the
facility can also be rented for $30,000 per year for the next 3
years by another company that is in negotiations concerning a
lease. The new machinery needed for SBC’s new project has...
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Can you explain to me the differnces in how we paid for the health care (access...
- Discuss proactive and defensive marketing in context to the company position in the hypothetical market structure...
- Write a java code that could be used to show the simulation of a tornado. use...
- A Canadian company issues an 8-year term bond with face value of $1,000 and 6% coupon...
- 1. Consider the following nuclides: &
- In general, teams can be described three ways. Name and define each.
- JAVASCRIPT: Please create an array of student names and another array of student grades. - Create...
ADVERTISEMENT