Corporate Finance Q112
0. Fred has the following information available.
| Operating income | $500,000 |
| Net income | $275,000 |
Given that the degree of total leverage is 3.63,the degree of operating leverage is closest to:
- Option : C
- Explanation : First, compute the degree of financial leverage: 500,000 / 275,000 = 1.818. Next, compute the degree of operating leverage: DTL = Degree of financial leverage * Degree of operational leverage. 3.63 = 1.818 * Degree of operational leverage. DOL = 2.
