Determine the degree of combined leverage


Question: I have a problem on fixed operating cost they are 5.8 million as it variable cost ratio is 0.20 the firm has $2 million on bonds outstanding with a coupon interest rate of eight percent. They have 30,000 shares of preferred stock outstanding which pays USD 2 annual dividend there are 100,000 shares of common stock outstanding. Revenues for the firm are USD 8 millions and the firm is in the 40% income tax bracket. I need to calculate degree of operating leverage and financial leverage and to determine the degree of combined leverage and interpret the value. 

Request for Solution File

Ask an Expert for Answer!!
Finance Basics: Determine the degree of combined leverage
Reference No:- TGS016245

Expected delivery within 24 Hours