.Following information are related to four firms of the same industry.Degree of Operating Leverage for Firm A is*2 points0.121.230.931.33
Question
Following information are related to four firms of the same industry.
Degree of Operating Leverage for Firm A is:
- 2 points
- 0.121
- 1.23
- 0.93
- 1.33
Solution
It looks like you're asking about the Degree of Operating Leverage (DOL) for four firms in the same industry, but the values provided seem to be a bit unclear. Here's how I can help you.
Analysis of Degree of Operating Leverage
-
Identify Given Values:
- You mentioned Firm A has a DOL of 2.0. The other potential values are unclear, but let's proceed with the understanding that they might relate to other firms.
-
Understanding Degree of Operating Leverage:
- The DOL measures how a percentage change in sales will affect profits before interest and taxes (EBIT).
- The formula for DOL at a certain level of sales is: where:
- = quantity sold
- = price per unit
- = variable cost per unit
- = fixed costs
-
Conclusion:
- Without more specific details (like the values for quantity, price, variable costs, and fixed costs for Firms B, C, and D), we cannot compute their DOLs accurately.
Final Answer
If you could provide additional details or clarify the values for the other firms, I could assist you further. Currently, we've established that Firm A has a DOL of 2.0, but specifics on the other firms are needed for a complete analysis.
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