Question
2. Pinches Salt Company has the following income statement: Sales &
2. Pinches Salt Company has the following income statement:
Sales $5,000,000
Variable Operating Cost 1,000,000
Fixed Operating Cost 2,000,000
EBIT $2,000,000
Interest 500,000
EBT $1,500,000
Tax (at 40%) 600,000
EAT $ 900,000
Preferred Dividends 100,000
Earnings available for CS $ 800,000
Shares Outstanding 400,000
a. Compute Pinches DOL, DFL, and DTL
b. If sales increase to $5,500,000, what is the forecast of the EPS. You need to make a new income statement to complete this problem.
Homework Answers
Answer #1
EXCEL FORMULA:
Note : Assume all other costs other than variable cost are constant.
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