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Albatross Airline’s fixed operating costs are $5 million, and its variable cost ratio is 0.30. The...

Albatross Airline’s fixed operating costs are $5 million, and its variable cost ratio is 0.30. The firm has $1.3 million in bonds outstanding with a coupon interest rate of 7 percent. Albatross has 25,000 shares of preferred stock outstanding, which pays a $3 annual dividend. There are 70,000 shares of common stock outstanding. Revenues for the firm are $8 million, and the firm is in the 40 percent corporate income tax bracket. Compute the following for the firm. Round your answers to two decimal places.

  • Degree of operating leverage:   

  • Degree of financial leverage:   

  • Degree of combined leverage:  

  • Interpret this value for DCL. A 1% change in_______ will result in a ________% change in ________________

  • Enter the word sales, ebit, or EPS in the first and last blanks.Round to two decimal places for the change

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jeff jeffy answered 1 year ago
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