Knowee
Questions
Features
Study Tools

.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
🧐 Not the exact question you are looking for?Go ask a question

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

  1. 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.
  2. 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: DOL=1+Q(PV)Q(PV)F DOL = 1 + \frac{{Q(P - V)}}{{Q(P - V) - F}} where:
    • Q Q = quantity sold
    • P P = price per unit
    • V V = variable cost per unit
    • F F = fixed costs
  3. 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.

This problem has been solved

Similar Questions

Calculate the Degree of Operational Leverage for the following firm.*2 points4.005.004.785.78

3.Calculate the value of Degree in Operating Leverage (DOL)*2 points0.18 times1.18 times2.18 times2.88 times

Describe how a financial manager could use the accounting degree of operating leverage when deciding to expand operations?

Leverage or debt ratios measure the degree to which a firm relies on ______.Multiple choice question.profitabilitytangible assetsowners equityborrowed funds

Higher operating leverage is related to the use of additional __________.common equity financingdebt financingfixed costsvariable costs

1/2

Upgrade your grade with Knowee

Get personalized homework help. Review tough concepts in more detail, or go deeper into your topic by exploring other relevant questions.