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Question: the following information applies to questions 13 through 15 solomon...

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The following information applies to questions 13 through 15. Solomon Company produces tires. The company's income statement for 2015 is as follows:

RIPKEN COMPANY, Income Statement

For the Year Ended December 31, 2015

Sales (25,000 gloves at $50 each) $1,250,000

Less Variable Costs (25,000 gloves at $20) 500,000

Fixed Costs 600,000

Earnings before Interest and Taxes (EBIT) 150,000

Interest Expense 80,000

Earnings Before Taxes (EBT) 70,000

Income Tax Expense (30%) 21,000

Earnings after Taxes (EAT) 49,000

13. What is the Degree of Operating Leverage?

14. What is the Degree of Financial Leverage?  

15. What is the Degree of Combined Leverage?

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