Problem 12-4 Leverage Analysis: You have developed the following income statement for - 88057

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Problem 12-4 Leverage Analysis: You have developed the following income statement for your corporation. It represents the most recent year’s operations, which ended yesterday. Sales $45,750,000 Variable costs 22,800,000 Revenue before Fixed costs $22,950,000 Fixed Costs 9,200,000 EBIT $13,750,000 Interest Expense 1,350,000 Earnings Before Taxes $12,400,000 Taxes @ 50% 6,200,000 Net Income $6,200,000 Your supervisor in the controller’s office has just handed you a memorandum asking for written responses to the following questions: a. What is the firm’s break even point in sales dollars? b. If sales should increase by 25% by what percent would earnings before taxes (and net income) increase?
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