Question:
Firms in Japan often employ both high operating and financial leverage because of the use of modern technology and close borrower-lender relationships. Assume the Mistake Company has a sales volume of 125,000 units at a price of $25 per unit; variable costs are $5 per unit and fixed costs are $1,800,000. Interest expense is $400,000. What is the degree of combined leverage for this Japanese firm?
Your answer must be, typed, double-spaced, Times New Roman font (size 12), one-inch margins on all sides, APA format and also include references.Provide step by step solutions for the above question