Financial Leverage anybody, income

Jupiter

Reading 46, Example 2, page 104.

Can anybody tell me how operating income was found?

pacmandefense

HI Loki,
The example 2 at page 104 followed the example 1 at page 101, so in Example 1 when they caculate the DOL, the denominator is the Operating income that = Q*(P-V) -F
Hope it can help,
Good luck with the exam

agulani

Not sure if u r taking about Actual or Estimated. Sales - COGS - SG&A - Int Expense = operating income.

If u read properly, u'll see estimated sales r increased by 5% and COGS, SG&A will be same percentage of Sales and Interest Expense are fixed at 7%.