Question of the Week

Over a period of one year, Mono Corp. saw it sales increase by 16%. Over the same period, its EBIT increased from $895,000 over to $1,235,000 and its net income rose from $254,000 over to $436,000. If Mono Corp.'s tax rate is 35%, what must be its degree of financial leverage?

a) 2.345
b) 0.530
c) 1.886
d) 1.536


Answer:

The correct answer is: c)